Q3 2026 CACI International Inc Earnings Call

April 23, 2026

Speaker #1: 2026 earnings conference call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Later, we will announce the opportunity for questions and instructions will be given at that time.

Speaker #1: Our compositions us for opportunities including Golden Dome, Indo Paycom support, Future Ground Architecture, and Space Superiority Missions. To fully leverage our combined capabilities, we have integrated ARCA and CACI's existing space portfolio under leadership of ARCA's former CEO.

Speaker #1: If you should need assistance during this call, please press *0 and someone will help you. At this time, I would like to turn the conference call over to George Price, Senior Vice President of Investor Relations for CAC INTERNATIONAL.

Speaker #1: Please go ahead, sir.

Speaker #2: Thanks, Jeanne. Good morning, everyone. I'm George Price, Senior Vice President of Investor Relations for CAC INTERNATIONAL. Thank you for joining us this morning. We are providing presentation slides, so let's move to slide 2.

Speaker #1: ARCA exemplifies the type of acquisition that investors should want us to make. Why competitive moat? Unique capabilities and technology? Exceptional execution history and strong financial performance?

Speaker #2: There will be statements in this call that do not address historical fact and, as such, constitute forward-looking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated.

Speaker #1: And all in one of the most strategically important domains in national security. It's our flexible and opportunistic capital deployment strategy in action, positioning CACI to drive long-term growth in free cash flow per share and additional shareholder value.

Speaker #2: Those factors are listed at the bottom of last night's press release and are described in the company's SEC filings. Our safe harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call.

Speaker #1: Slide 7, please. CACI is a national security company. That focus continues to be a powerful differentiator in the marketplace. We have more than 1,400 people embedded in mission spaces across all combatant commands performing planning, intelligence analysis, cyber, and operational support.

Speaker #2: I would also like to point out that our presentation will include discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

Speaker #2: Let's turn to slide 3, please. To open our discussion this morning, here's John Mengucci, President and Chief Executive Officer of CAC INTERNATIONAL. John.

Speaker #1: We are involved in every operational headline you read, as well as the many operations you will never read about. This proximity to mission gives us an advantage that is hard to replicate.

Speaker #3: Thanks, George, and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year 2026 results. As well as our updated fiscal 2026 guidance.

Speaker #1: We understand the mission and the threats because we see them every day. This creates a feedback loop that sharpens our business development, strengthens our reputation for execution, and informs on decision-making, allowing us to confidently invest ahead of customer need.

Speaker #3: We'll meet this morning as Jeff McLaughlin, our Chief Financial Officer. Let's move to slide 4, please. Before turning to our results, I want to start by reminding everyone the CAC I is a fundamentally different company than it was 10 or even 5 years ago.

Speaker #1: These are meaningful discriminators that create competitive advantage and help drive our financial performance. For example, CACI recently received multi-year extensions on several contracts, a critical mission-focused areas, as a direct result of our exceptional delivery.

Speaker #3: This evolution is the result of a clear and consistent strategy execution over many years. It did not happen by accident. The key elements of our strategy are first, we operate in 7 markets where we possess decades of deep mission knowledge.

Speaker #1: Slide 8, please. Our strategic investments informed by the mission proximity I just described have positioned CACI as a leader in software-defined technology, in key warfighting domains, that are receiving significant attention and funding from our customers.

Speaker #3: We know and understand what our customers need. Second, we focus on enduring priorities. We are a national security company that targets narrow, deep funding streams.

Speaker #3: Third, we're a software-defined technology leader. We differentiate ourselves by using software—excuse me—to address critical needs with the speed, agility, and efficiency our customers demand.

Speaker #1: And these investments also demonstrate a repeatable strategy that would drive future growth in shareholder value. A great example is our spectral program, where we are developing the next generation of shipboard signals intelligence and electronic warfare capabilities for the Navy's surface combatant ships.

Speaker #3: Fourth, we invest ahead of customer need to show the art of the possible. We're not waiting for requirements. And fifth, we deploy capital in a flexible and opportunistic manner to create value for our customers and our shareholders.

Speaker #1: We initially invested ahead of customer need to show them the out-of-the-possible. And to demonstrate our differentiated solution during the bid phase. Now we are actively investing ahead of need during execution to accelerate delivery of capabilities to the field, a key ask of the current administration.

Speaker #3: Executing this strategy has enabled us to expand our portfolio, increase free cash flow per share, and generate additional shareholder value. Slide 5, please. Turning to our third quarter results, we delivered another quarter of outstanding performance on our way to another exceptional year.

Speaker #1: During the quarter, the program continued to progress as we achieved Milestone C, marking the start of Spectral's low-rate initial production and deployment phase. This was a defining step toward ramping up the program and delivering this critical EW technology to the fleet.

Speaker #3: Revenue for the quarter was $2.4 billion, up 8.5% year over year. We also generated a strong EBITDA margin of 12.3% and robust free cash flow of $221 million.

Speaker #3: In addition, we won $2.2 billion of awards, which represents a book-to-bill of 0.9 times for the quarter and $1.2 times on a trailing 12-month basis.

Speaker #1: And because Spectral is built using software-defined technology, it would open architectures and other key administration priorities. We see significant additional opportunities across the Department of War and international.

Speaker #3: These awards were driven by our exceptionally strong recompete performance and important indicator of customer confidence and a key enabler of long-term growth. While award activity improved in the quarter, it has not yet fully recovered from the multiple government shutdowns and acquisition organization changes.

Speaker #1: Another example is encountering OAS. What we are seeing accelerating demand increasing orders and a growing pipeline driven by Merlin, our commercially sold counter OAS system.

Speaker #1: Merlin leverages nearly two decades of our counter-OAS investments and work across the Department of War to deliver a system that sees further, detects more, provides more critical decision-making time, and delivers more effective load and no collateral damage capabilities than any other available system.

Speaker #3: As we said before, quarterly awards can be lumpy. But we continue to have excellent visibility, a strong pipeline, and see a very constructive macro environment.

Speaker #3: Our results continue to reinforce the CAC I is differentiated and well-positioned. With that said, we're raising our fiscal '26 revenue and EBITDA margin guidance driven by the addition of ARCA and the strength of our organic margin performance.

Speaker #1: Merlin is a software-defined system that can be rapidly updated and provides a nearly unlimited magazine of economically sustainable non-kinetic effects, including unique cellular detection and defeat capabilities.

Speaker #3: Slide 6, please. On that note, let's discuss our recent acquisition in a bit more detail. During the third quarter, we closed the acquisition of ARCA, a leading technology company focused on national security missions in the space domain.

Speaker #1: From concept to deployment in under a year, we are not only providing the department of war with the capabilities they are asking for, but we are also delivering them at the speed improving this in real time with the Merlin system that our customers deployed on the southern border.

Speaker #3: ARCA brings exquisite space-based imaging, sensor technology, with high technical barriers to entry, agentic AI-based ground processing software, and deep customer relationships built over decades of strong performance.

Speaker #1: A final example is our strong positioning for Golden Dome. CACI has been investing in, developing, and building many of the capabilities this mission requires across many critical layers.

Speaker #3: ARCA is a powerful addition to CAC I. We now have sensors deployed across all domains. We can provide multi-source actionable intelligence and bring operationalized agentic AI capabilities to classified customers across the national security apparatus.

Speaker #1: First, our counter-OAS systems. Defending the homeland is not just about ballistic or hypersonic threats; it's also increasingly about threats from unmanned aircraft systems.

Speaker #1: CACI's technology is ideally suited for this mission. Our extended detection range provides critical time for decision-making, and low to no collateral damage effects are critically important for mission success.

Speaker #3: In fact, we already have agentic AI efforts underway with our shared customer footprint, and we see significant additional cross-selling opportunities. ARCA positions us for opportunities including Golden Dome, Indo Paycom support, Future Ground Architecture, and space superiority missions.

Speaker #1: Second, our exquisite left of launch capabilities. These include sensitive cyber activities as well as our worldwide set of embedded sensors, which can detect and defeat threats before they are deployed.

Speaker #1: And third is our space-based sensing. ARCA significantly expands our capabilities in the space domain, including technologies such as hyperspectral imaging for missile detection. Spectral, Merlin, and Golden Dome are three significant proof points of how CACI creates value for our customers and our shareholders.

Speaker #3: To fully leverage our combined capabilities, we have integrated ARCA and CAC I's existing space portfolio under leadership of ARCA's former CEO. ARCA exemplifies the type of acquisition that investors should want us to make.

John Mengucci: We can provide multi-source, actionable intelligence and bring operationalized agentic AI capabilities to classified customers across the national security apparatus. In fact, we already have agentic AI efforts underway with our shared customer footprint, and we see significant additional cross-selling opportunities. Archon positions us for opportunities including Golden Dome, Indo-PACOM support, future ground architecture, and space superiority missions. To fully leverage our combined capabilities, we have integrated Archon and CACI's existing space portfolio under the leadership of Archon's former CEO. Archon exemplifies the type of acquisition that investors should want us to make: wide competitive moat, unique capabilities and technology, exceptional execution history, and strong financial performance, and all in one of the most strategically important domains in national security. It's our flexible and opportunistic capital deployment strategy in action, positioning CACI to drive long-term growth in free cash flow per share and additional shareholder value. Slide seven, please.

Speaker #3: Why competitive moat? Unique capabilities and technology? Exceptional execution history and strong financial performance? And all in one of the most strategically important domains in national security.

Speaker #1: They demonstrate where we identified an enduring need early, invested well ahead of award, and have established differentiated positions through years of discipline execution and continued innovation.

Speaker #3: It's our flexible and opportunistic capital deployment strategy in action positioning CAC I to drive long-term growth in free cash flow per share and additional shareholder value.

Speaker #1: Slide 9, please. Turning to the macro environment, we continue to see constructive budgets and demand signals. While the government fiscal year '27 budget is still evolving, the proposed spending looks very positive in many key areas for CACI.

Speaker #3: Slide 7, please. CAC I is a national security company. That focus continues to be a powerful differentiator in the marketplace. We have more than 1,400 people embedded in mission spaces across all combatant commands performing planning, intelligence analysis, cyber, and operational support.

Speaker #1: Including electronic warfare, encounter OAS, space, especially classified space, encounter space programs, C5 ISR, and IT modernization, including AI and the digital backbone. We are in the right markets that are aligned to enduring, well-funded priorities and we're providing the right capabilities to address our national security customers' most pressing needs.

Speaker #3: We are involved in every operational headline you read, as well as the many operations you will never read about. This proximity to mission gives us an advantage that is hard to replicate.

Speaker #1: And with that, I'll turn the call over to Jeff.

Speaker #2: Thank you, John. And good morning, everyone. Please turn to slide 10. As John mentioned, we're very pleased with our third-quarter performance despite some modest disruption from the ongoing DHS shutdown.

Speaker #3: We understand the mission and the threats because we see them every day. This creates a feedback loop that sharpens our business development, strengthens our reputation for execution, and informs on decision-making allowing us to confidently invest ahead of customer need.

Speaker #2: Our revenue and awards reflect our strong market position in a recovering, but still sluggish, award environment. While our strong margins and cash flow demonstrate the high-value, differentiated characteristics of our offerings, and our operational excellence.

John Mengucci: CACI is a national security company. That focus continues to be a powerful differentiator in the marketplace. We have more than 1,400 people embedded in mission spaces across all combatant commands, performing planning, intelligence analysis, cyber, and operational support. We are involved in every operational headline you read, as well as the many operations you will never read about. This proximity to mission gives us an advantage that is hard to replicate. We understand the mission and the threats because we see them every day. This creates a feedback loop that sharpens our business development, strengthens our reputation for execution, and informs on decision-making, allowing us to confidently invest ahead of customer need. These are meaningful discriminators that create competitive advantage and help drive our financial performance. For example, CACI recently received multi-year extensions on several contracts in critical mission-focused areas as a direct result of our exceptional delivery.

Speaker #3: These are meaningful discriminators that create competitive advantage and help drive our financial performance. For example, CAC I recently received multi-year extensions on several contracts in critical mission-focused areas as a direct result of our exceptional delivery.

Speaker #2: In the third quarter, we generated revenue of $2.4 billion, representing 8.5% year-over-year growth, of which 6.8% was organic. Despite the modest DHS impacts that I mentioned, we still saw the expected acceleration in organic growth moving into the second half of the year.

Speaker #3: Slide 8, please. Our strategic investments informed by the mission proximity I just described have positioned CAC I as a leader in software-defined technology and key warfighting domains that are receiving significant attention and funding from our customers.

Speaker #3: And these investments also demonstrate a repeatable strategy that would drive future growth and shareholder value. A great example is our spectral program where we are developing the next generation of shipboard signals intelligence and electronic warfare capabilities for the Navy's surface combatant ships.

Speaker #3: We initially invested ahead of customer need to show them the out of the possible and to demonstrate our differentiated solution during the bid phase.

John Mengucci: Slide eight, please. Our strategic investments, informed by the mission proximity I just described, have positioned CACI as a leader in software-defined technology in key war-fighting domains that are receiving significant attention and funding from our customers. These investments also demonstrate a repeatable strategy that will drive future growth and shareholder value. A great example is our Spectral program, where we are developing the next generation of shipboard signals intelligence and electronic warfare capabilities for the Navy surface combatant ships. We initially invested ahead of customer need to show them the art of the possible and to demonstrate our differentiated solution during the bid phase. Now we are actively investing ahead of need during execution to accelerate delivery of capabilities to the field, a key ask of the current administration.

Speaker #3: Now we are actively investing ahead of need during execution to accelerate delivery of capabilities to the field, a key ask of the current administration.

Speaker #3: During the quarter, the program continued to progress as we achieved milestone C, marking the start of spectral's low-rate initial production and deployment phase. This was a defining step towards ramping up the program and delivering this critical EW technology to the fleet.

Speaker #3: And because spectral is built, using software-defined technology would open architectures another key administration priority we see significant additional opportunities across the department of war and international.

Speaker #3: Another example is encountering OAS. Where we are seeing accelerating demand increasing orders and a growing pipeline driven by Merlin, our commercially sold counter OAS system.

Speaker #3: Merlin leverages nearly two decades of our counter OAS investments and work across the department of war to deliver a system that sees further detects more provides more critical decision-making time and delivers more effective load and no collateral damage capabilities than any other available system.

John Mengucci: During the quarter, the program continued to progress as we achieved Milestone C, marking the start of Spectral's low-rate initial production and deployment phase. This was a defining step towards ramping up the program and delivering this critical EW technology to the fleet. Because Spectral was built using software-defined technology with open architectures, another key administration priority, we see significant additional opportunities across the Department of Defense and internationally. Another example is in counter-UAS, where we are seeing accelerating demand, increasing orders, and a growing pipeline driven by Merlin, our commercially sold counter-UAS system. Merlin leverages nearly two decades of our counter-UAS investments and work across the Department of Defense to deliver a system that sees further, detects more, provides more critical decision-making time, and delivers more effective low-to-no collateral damage capabilities than any other available system.

Speaker #3: Merlin is a software-defined system that can be rapidly updated and provides a nearly unlimited magazine of economically sustainable non-kinetic effects including unique cellular detection and defeat capabilities.

Speaker #3: From concept to deployment in under a year, we are not only providing the department of war with the capabilities they are asking for, but we are also delivering them at the speed demanded.

Speaker #3: We are improving this in real time with the Merlin system that our customers deployed on the southern border. A final example is our strong positioning for Golden Dome.

Speaker #3: CAC I has been investing in, developing, and building many of the capabilities this mission requires across many critical layers. First, our counter OAS systems.

John Mengucci: Merlin is a software-defined system that can be rapidly updated and provides a nearly unlimited magazine of economically sustainable non-kinetic effects, including unique cellular detection and defeat capabilities. From concept to deployment in under a year, we are not only providing the Department of Defense with the capabilities they are asking for, but we are also delivering them at the speed demanded. We are proving this in real time with a Merlin system that our customers deployed on the southern border. A final example is our strong positioning for Golden Dome. CACI has been investing in, developing, and building many of the capabilities this mission requires across many critical layers. First are our counter-UAS systems. Defending the homeland is not just about ballistic or hypersonic threats. It's also increasingly about threats from unmanned aircraft systems.

Speaker #3: Defending the homeland is not just about ballistic or hypersonic threats. It's also increasingly about threats from unmanned aircraft systems. CAC I's technology is ideally suited for this mission.

Speaker #3: We're extended detection range provides critical time for decision-making in low to no collateral damage effects are critically important for mission success. Second, are our exquisite left of launch capabilities.

Speaker #3: These include sensitive cyber activities as well as our worldwide set of embedded sensors, which can detect and defeat threats before they are deployed. And third is our space-based sensing.

Speaker #3: ARCA's significantly expands our capabilities in the space domain including technologies such as hyperspectral imaging for missile detection. Spectral Merlin and Golden Dome are three significant proof points of how CAC I creates value for our customers and our shareholders.

John Mengucci: CACI's technology is ideally suited for this mission, where extended detection range provides critical time for decision-making, and low-to-no collateral damage effects are critically important for mission success. Second are our exquisite left-of-launch capabilities. These include sensitive cyber activities as well as our worldwide set of embedded sensors, which can detect and defeat threats before they are deployed. Third is our space-based sensing. Archon significantly expands our capabilities in the space domain, including technologies such as hyperspectral imaging for missile detection. Spectral, Merlin, and Golden Dome are three significant proof points of how CACI creates value for our customers and our shareholders. They demonstrate where we identified an enduring need early, invested well ahead of award, and have established differentiated positions through years of disciplined execution and continued innovation. Slide nine, please. Turning to the macro environment, we continue to see constructive budgets and demand signals.

Speaker #3: They demonstrate where we identified an enduring need early, invested well ahead of award, and have established differentiated positions through years of discipline execution and continued innovation.

Speaker #3: Slide 9, please. Turning to the macro demand signals. While the government fiscal year 27 budget is still evolving, the proposed spending looks very positive in many key areas for CAC I.

Speaker #3: Including electronic warfare and counter OAS, space, especially classified space and counter space programs, C5 ISR, and IT modernization. Including AI and the digital backbone.

Speaker #3: We are in the right markets that are aligned to enduring, well-funded priorities and we're providing the right capabilities to address our national security customers' most pressing needs.

Speaker #3: And with that, I'll turn the call over to Jeff.

John Mengucci: While the government fiscal year 2027 budget is still evolving, the proposed spending looks very positive in many key areas for CACI, including electronic warfare and counter-UAS, space, especially classified space and counter space programs, C5ISR, and IT modernization, including AI and the digital backbone. We are in the right markets that are aligned to enduring well-funded priorities, and we're providing the right capabilities to address our national security customers' most pressing needs. With that, I'll turn the call over to Jeff.

Speaker #2: Our revenue and awards reflect our strong market position in a recovering but still sluggish award environment. While our strong margins and cash flow demonstrate the high-value differentiated characteristics of our offerings and our operational excellence.

Speaker #2: In the third quarter, we generated revenue of $2.4 billion. Representing 8.5% year-over-year growth of which 6.8% was organic. Despite the modest DHS impacts that I mentioned, we still saw the expected acceleration in organic growth moving into the second half of the year.

Jeffrey MacLauchlan: Thank you, John. Good morning, everyone. Please turn to slide 10. As John mentioned, we're very pleased with our Q3 performance despite some modest disruption from the ongoing DHS shutdown. Our revenue and awards reflect our strong market position in a recovering but still sluggish award environment. While our strong margins and cash flow demonstrate the high-value differentiated characteristics of our offerings and our operational excellence. In Q3, we generated revenue of $2.4 billion, representing 8.5% year-over-year growth, of which 6.8% was organic. Despite the modest DHS impacts that I mentioned, we still saw the expected acceleration in organic growth moving into H2 of the year. EBITDA margin of 12.3% in the quarter represents a year-over-year increase of 60 basis points, even after absorbing $17 million of Arca transaction costs.

Speaker #2: EBITDA margin of 12.3% in the quarter represents a year-over-year increase of 60 basis points. Even after absorbing $17 million of ARCA transaction costs. Adjusting for these expenses are strong third-quarter profitability was driven primarily by overall mix and strong program execution.

Speaker #2: Third quarter adjusted diluted earnings per share of $7.27 were 17% higher than a year ago. Greater operating income along with a lower share count, more than offset higher interest expense including $11 million related to ARCA.

Speaker #2: A higher income tax provision and the transaction costs I mentioned earlier. Finally, we delivered healthy free cash flow of $221 million in the quarter driven by strong profitability and good working capital management.

Jeffrey MacLauchlan: Adjusting for these expenses, our strong Q3 profitability was driven primarily by overall mix and strong program execution. Q3 adjusted diluted earnings per share of $7.27 were 17% higher than a year ago. Greater operating income along with a lower share count more than offset higher interest expense, including $11 million related to Arca, a higher income tax provision, and the transaction costs I mentioned earlier. Finally, we delivered healthy free cash flow of $221 million in the quarter, driven by strong profitability and good working capital management. Q3 cash flow was reduced by approximately $20 million due to transaction costs and other acquisition-related financing fees. Days sales outstanding, or DSO, were 55 days, two days lower than the prior quarter. Slide 11, please.

Speaker #2: Third quarter cash flow was reduced by approximately $20 million due to transaction costs and other acquisition-related financing fees. Day sales outstanding or DSO were $55 days two days lower than the prior quarter.

Speaker #2: Slide 11, please. Turning to our balance sheet and capital structure, our pro forma leverage at the end of Q3 was 4.2 times net debt to trailing 12-month EBITDA.

Third quarter, adjusted diluted earnings per share of $7.27 were 17% higher than a year ago.

Speaker #2: Slightly better than the expectation we provided when we announced the ARCA acquisition. We continue to expect leverage to return to the low threes within six quarters based on the strong cash flow characteristics of our business.

Greater operating income along with a lower share count more than offset higher interest expense, including 11 million related to ARCA a higher income tax provision and the transaction costs. I mentioned earlier

Speaker #2: I'll remind you again that we have a strong track record of successfully and quickly de-leveraging after major acquisitions. Which underscores our consistent financial performance disciplined capital deployment and demonstrated access to capital.

Finally, we delivered healthy free, cash flow of 221 million in the quarter driven by strong profitability and good working Capital Management.

Third quarter, cash flow was reduced by approximately $20 million due to transaction costs and other acquisition-related financing fees.

Day sales outstanding or DSO? Were 55 days, 2 days lower than the prior quarter?

Speaker #2: As we have previously indicated, ARCA is accretive to both growth and margins. The acquisition of ARCA is just the latest example of our flexible and opportunistic capital deployment strategy and the evolution of our portfolio.

Slide 11, please.

Jeffrey MacLauchlan: Turning to our balance sheet and capital structure, our pro forma leverage at the end of Q3 was 4.2 times net debt to trailing 12-month EBITDA, slightly better than the expectation we provided when we announced the Arca acquisition. We continue to expect leverage to return to the low threes within six quarters based on the strong cash flow characteristics of our business. I'll remind you again that we have a strong track record of successfully and quickly de-leveraging after major acquisitions, which underscores our consistent financial performance, disciplined capital deployment, and demonstrated access to capital. As we have previously indicated, Arca is accretive to both growth and margins. The acquisition of Arca is just the latest example of our flexible and opportunistic capital deployment strategy and the evolution of our portfolio, which positions CACI to deliver long-term growth, free cash flow per share, and additional shareholder value.

Speaker #2: Which positions CAC I to deliver long-term growth and free cash flow per share and additional shareholder value. Slide 12, please. We're pleased to increase our fiscal 26 revenue and EBITDA margin guidance driven by the addition of ARCA and the strength of our organic margin performance.

Turning to our balance sheet and capital structure are pro-forma. Leverage at the end of Q3 was 4.2 times. Net debt to trailing 12 month, Eva do slightly better than the expectation, we provided, when we announced the Arca acquisition

We continue to expect leverage to return to the low 3s within 6 quarters, based on the strong, cash flow characteristics of our business.

I'll remind you again that we have a strong track record of succeeding both successfully and quickly.

Leveraging.

Your major acquisitions.

Speaker #2: You'll notice on the right-hand side of the chart we've provided a breakdown of costs associated with the acquisition for transparency and your modeling purposes.

Which underscores our consistent financial performance discipline Capital deployment and demonstrated access to Capital.

Speaker #2: We now expect revenue to be between $9.5 and $9.6 billion. This represents total growth of 10.1% to 11.3%. Which includes about 3.5 points of growth from acquisitions including $150 million from ARCA.

As we have previously indicated ARCA is a creative to both growth and margins.

Speaker #2: We're increasing our fiscal 26 EBITDA margin to the 11.8% to 11.9% range underscoring our strong execution and evolving portfolio as well as contributions from ARCA.

An opportunistic, Capital, deployment strategy, and the evolution of our portfolio, which positions caci to deliver long-term growth and free cash flow per share and additional shareholder value.

Jeffrey MacLauchlan: Slide 12, please. We're pleased to increase our fiscal 2026 revenue and EBITDA margin guidance driven by the addition of Azure Summit and the strength of our organic margin performance. You'll notice on the right-hand side of the chart, we've provided a breakdown of costs associated with the acquisition for transparency and your modeling purposes. We now expect revenue to be between $9.5 and $9.6 billion. This represents total growth of 10.1% to 11.3%, which includes about 3.5 points of growth from acquisitions, including $150 million from Azure Summit. We're increasing our fiscal 2026 EBITDA margin to the 11.8% to 11.9% range, underscoring our strong execution and evolving portfolio as well as contributions from Azure Summit. Our full year margin outlook includes the impact of approximately $22 million of transaction costs related to the acquisition. Our updated FY 2026 adjusted net income guidance is between $615 and $630 million.

Slide 12, please.

Speaker #2: Our full-year margin outlook includes the impact of approximately $22 million of transaction costs related to the acquisition. Our updated FY 26 adjusted net income guidance is between $615 and $630 million.

We're pleased to increase our fiscal, 26 revenue and Evita margin guidance driven by the additional ARCA and the strength of our organic margin performance.

You'll notice on the right hand side of the chart, we provided a breakdown of costs associated with an acquisition for transparency and your modeling purposes.

Speaker #2: Adjusted net income reflects the after-tax impact of approximately $60 million of pre-tax transaction costs and higher interest expense largely offset by stronger organic margin.

We now expect Revenue to be between 9.5 and 9.6 billion. This represents total growth of 10.1% to 11.3%, which includes about 3 and a half points of growth from Acquisitions including 150 million dollars from ARCA

Speaker #2: And ARCA's earnings contribution. This yields full-year adjusted EPS guidance of between $27.70 and $28.38 per share. Which represents growth of 5 to 7 percent even as we absorb these costs.

We're increasing our fiscal '26 EBITDA margin to the 11.8% to 11.9% range.

Underscoring our strong execution and evolving portfolio, as well as contributions from Arco.

Speaker #2: And finally, we are reaffirming our free cash flow guidance of at least $725 million. Even after absorbing nearly $50 million of transaction costs, interest expense, and an increased investment in capital expenditures.

Our full year margin outlook includes the impact of approximately $22 million of transaction costs related to the acquisition.

Jeffrey MacLauchlan: Adjusted net income reflects the after-tax impact of approximately $60 million of pre-tax transaction costs and higher interest expense, largely offset by stronger organic margin and Azure's earnings contribution. This yields full year adjusted EPS guidance of between $27.70 and $28.38 per share, which represents growth of 5% to 7% even as we absorb these costs. Finally, we are reaffirming our free cash flow guidance of at least $725 million, even after absorbing nearly $50 million of transaction costs, interest expense, and an increased investment in capital expenditures. As we consistently say, we see free cash flow per share as the ultimate value creation metric. Our FY 2026 guidance represents 65% growth in free cash flow per share over FY 2025. Slide 13, please. Turning to forward indicators, all metrics continue to provide good long-term visibility into the strength of our business.

Our updated FY 26 adjusted, net income guidance is between 615 and 630 million.

Speaker #2: As we consistently say, we see free cash flow per share as the ultimate value creation metric. And our FY 26 guidance represents 65% growth in free cash flow per share over FY 25.

Adjusted net income. Reflects the after tax impact of approximately dollars of pre-tax. Transaction costs and higher interest expense, largely offset by stronger, organic margin and Arc as earnings contribution.

Speaker #2: Slide 13, please. Turning to forward indicators, all metrics continue to provide good long-term visibility into the strength of our business. Our third quarter book-to-bill of 0.9 times and our trailing 12-month book-to-bill of 1.2 times reflect good performance in the marketplace even with the multiple shutdowns and slow rebound in award decisions.

This yields full year, adjusted EPS guidance on between 2770, and 2838 per share, which represents growth of 5 to 7% even as we absorb these costs.

Speaker #2: The trailing 12-month weighted average duration of our awards in Q3 continued to be just over six years. Our total backlog of 33.4 billion increased 6% year over year while our funded backlog increased 19% over the same period.

And finally, we are reaffirming our free cash flow. Guidance of at least 725 million even after absorbing nearly 50 million dollars of transaction costs interest expense and an increased investment in capital expenditures.

Speaker #2: Both metrics reflect healthy organic growth even when normalizing for ARCA's contribution of $835 million to total backlog and $422 million to funded backlog. Additionally, ARCA has another $2 billion of non-competitive franchise programs from which we expect to recognize revenue over time but that don't yet meet the regulatory criteria to be added to backlog.

As we consistently say, we see free cash flow per share as the ultimate value creation metric, and our FY26 guidance represents 65% growth in free cash flow per share over FY25.

Slide 13. Please

Jeffrey MacLauchlan: Our Q3 book-to-bill of 0.9 times and our trailing 12-month book-to-bill at 1.2 times reflect good performance in the marketplace, even with the multiple shutdowns and slow rebound in award decisions. The trailing 12-month weighted average duration of our awards in Q3 continued to be just over six years. Our total backlog of $33.4 billion increased 6% year over year, while our funded backlog increased 19% over the same period. Both metrics reflect healthy organic growth, even when normalizing for ARCA's contribution of $835 million to total backlog and $422 million to funded backlog. Additionally, ARCA has another $2 billion of non-competitive franchise programs from which we expect to recognize revenue over time, but they don't yet meet the regulatory criteria to be added to backlog.

Turning to forward indicators all metrics. Continue to provide good long-term visibility into the strength of our business.

Our third quarter book to Bill of 0.9 times and our trailing 12-month book to Bill of 1.2 times, reflect good performance in the marketplace, even with the multiple shutdowns and slow Rebound in award decisions.

Speaker #2: For fiscal year 26, we now expect $98% of our revenue to come from existing programs with 1% each from re-competes and new business. Progress on these metrics reflects our continued strong operational performance and yields increased confidence in our outlook as we close out the year.

The trailing 12-month weighted average duration of our awards in Q3 continues to be just over 6 years.

Our total backlog of $33.4 billion increased 6% year-over-year, while our funded backlog increased 19% over the same period.

Speaker #2: In terms of our pipeline, we have more than $4 billion of bids under evaluation. Over 80% of which are for new business to CAC I.

Both metrics, reflect healthy, organic growth. Even when normalizing for arca's contribution of 835 million to Total, backlog and 422 million to fund it backlog.

Speaker #2: We expect to submit another $22 billion in bids over the next two quarters with over 75% of those being for new business. We continue to have excellent visibility.

Speaker #2: Our well-positioned in a very constructive macro environment and remain very comfortable with our outlook including our three-year targets. In summary, we delivered another quarter of strong results.

Additionally, ARCA has another $2 billion of non-competitive franchise programs, for which we expect to recognize revenue over time, but that don't yet meet the regulatory criteria to be added to backlog.

Jeffrey MacLauchlan: For fiscal year 2026, we now expect 98% of our revenue to come from existing programs, with 1% each from recompetes and new business. Progress on these metrics reflects our continued strong operational performance and yields increased confidence in our outlook as we close out the year. In terms of our pipeline, we have more than $4 billion of bids under evaluation, over 80% of which are for new business to CACI. We expect to submit another $22 billion in bids over the next two quarters, with over 75% of those being for new business. We continue to have excellent visibility, are well-positioned in a very constructive macro environment, and remain very comfortable with our outlook, including our three-year targets. In summary, we delivered another quarter of strong results. Our performance continues to demonstrate our differentiated position in the marketplace, which is further enhanced by our acquisition of Azure Summit.

Speaker #2: Our performance continues to demonstrate our differentiated position in the marketplace which is further enhanced by our acquisition of ARCA. Our ongoing investment ahead of customer need enables us to win and execute high-value enduring work that drives long-term growth, increased free cash flow per share, and additional shareholder value.

For fiscal year 26. We now expect 98% of our Revenue to come from existing programs with 1% each from recompete and new business progress. On these metrics, reflects our continued, strong operational performance and yields increased confidence in our Outlook as we close out the year.

in terms of our pipeline, we have more than 4 billion dollars of bids under evaluation

Over 80% of which are for new business to caci.

Speaker #2: And with that, I'll turn the call back over to John.

Speaker #1: Thank you, Jeff. Let's go to slide 14, please. In closing, I want to emphasize what truly differentiates CAC I. While there's talk about adjusting to the changing market, we're already delivering.

We expect to submit another 22 billion dollars in bids over the next 2 quarters with over 75% of those being for new business.

We continue to have excellent. Visibility our well positioned in a very constructed macro environment and remain very comfortable with our Outlook, including our 3 year targets.

Speaker #1: The anticipated years ago, with speed, software-defined solutions, and mission proximity, would define success for the long-term and national security. And we position the company accordingly through deliberate investments in discipline execution of our strategy.

Jeffrey MacLauchlan: Our ongoing investment ahead of customer need enables us to win and execute high value, enduring work that drives long-term growth, increased free cash flow per share, and additional shareholder value. With that, I'll turn the call back over to John.

In summary, we delivered another quarter of strong results, our performance continues to demonstrate our differentiated position in the marketplace, which is further enhanced by our acquisition of ARCA.

Speaker #1: This is all about expanding the limits of national security. It isn't about chasing trends. Understanding where threats are evolving where our customers' hardest problems will be and building the capabilities to address them before they ask.

Our ongoing investment ahead of customer need enables us to win and execute high-value. And during work that drives long-term growth increased free, cash flow per share and additional shareholder value.

John Mengucci: Thank you, Jeff. Let's go to slide 14, please. In closing, I want to emphasize what truly differentiates CACI. While others talk about adjusting to the changing market, we're already delivering. We anticipated years ago that speed, software-defined solutions, and mission proximity would define success for the long term in national security, and we positioned the company accordingly through deliberate investments and disciplined execution of our strategy. This is all about expanding the limits of national security. It isn't about chasing trends. Understanding where threats are evolving, where our customers' hardest problems will be, and building the capabilities to address them before they ask. That's what's allowed us to compete and win against a broader set of competitors. Our Q3 and FY 2026 results to date demonstrate this differentiation in action.

John.

Speaker #1: That's what's allowed us to compete and win against a broader set of competitors. Our third quarter of fiscal 26 results to date demonstrates this differentiation in action.

Thank you, Jeff. Let's go to slide 14. Please

In closing, I want to emphasize what? Truly differentiates caci.

Speaker #1: Strong organic growth, expanding margins, robust cash generation, and the strategic addition of ARCA to further strengthen our position in the space domain. We're executing our strategy delivering for our customers and driving long-term shareholder value.

Well, let's talk about adjusting to the changing market or already delivery.

The anticipated years ago and speed suffer to find solutions and mission proximity with defined success for the long term and national security. We position the company accordingly through deliberate investments in disciplinary execution of our strategy.

Speaker #1: Before I turn the call over for questions, I want to congratulate NASA and the Artemis II crew on their historic achievement. I also want to recognize the both CAC I and ARCA contributed critical technology that exemplifies the caliber and mission impact of our offerings.

This is all about expanding the limits of national security. It isn't about chasing trends.

Speaker #1: CAC I's optical communications technology enabled high-definition video and data transmission throughout the entire mission. While ARCA provided essential sensing technology on the SLS rocket to ensure a safe crew ascent.

Understanding where threats are evolving, where our customers hardest problems will be in building the capabilities to address them before they asked, that's what's allowed us to compete and win against a broader set of competitors.

John Mengucci: Strong organic growth, expanding margins, robust cash generation, and the strategic addition of ARCA to further strengthen our position in the space domain. We're executing our strategy, delivering for our customers, and driving long-term shareholder value. Before I turn the call over for questions, I want to congratulate NASA and the Artemis II crew on their historic achievement. I also want to recognize that both CACI and ARCA contributed critical technology that exemplifies the caliber and mission impact of our offerings. CACI's optical communications technology enabled high-definition video and data transmission throughout the entire mission, while ARCA provided essential sensing technology on the SLS rocket to ensure a safe crew ascent. To both teams, thank you for your exceptional work on this landmark achievement for our nation's space program.

Our third quarter fiscal '26 results to date demonstrate this differentiation in action,

Speaker #1: To both teams, thank you for your exceptional work on this landmark achievement for our nation's space program. As is always the case, our success is driven by our now 27,000 employees who were ever vigilant in expanding the limits of national security.

Strong organic growth expanding margins robust, cash generation and the Strategic edition of ARCA to further strengthen our position in the space domain.

We're executing our strategy delivering for our customers and deliver in driving long-term shareholder value.

Speaker #1: To everyone on the CAC I team, I am proud of what you do every day for our company and for our nation. And to our shareholders, I thank you for your continued support of CAC I.

Speaker #1: With that, Jeannie, let's open the call for questions.

Speaker #3: At this time, in order to ask a question, press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Before I turn the call over for questions. I want to congratulate NASA and the Artemis 2 crew on their historic achievement. I also want to recognize the both CCI and architect contributing critical technology that exemplifies, the caliber and Mission impact of our offerings. Cci's, Optical Communications technology enabled, high-definition video and data transmission throughout the entire mission.

Speaker #3: For today's call, we do ask you that you limit yourself to one question and one follow-up. Thank you. Your first question comes from the line of John Sigman with Stifel.

Our team provided essential sensing technology on the SLS rocket to ensure a safe crew ascent.

John Mengucci: As is always the case, our success is driven by our now 27,000 employees, who are ever vigilant in expanding the limits of national security. To everyone on the CACI team, I am proud of what you do every day for our company and for our nation. To our shareholders, I thank you for your continued support of CACI. With that, Jeannie, let's open the call for questions.

To both teams, thank you for your exceptional work on this landmark achievement for our nation's space program.

Speaker #3: Please go ahead.

Speaker #4: Good morning, John and Jeff and George. Thanks for taking my question. Congratulations.

Speaker #5: Congratulations.

Speaker #4: Congratulations on closing the transaction. Just a real quick one. Just with ARCA, maybe can you and now that it's all integrated under one leadership, can you scale how big your space exposure is today?

As this always the case, our success is driven by our. Now 27,000 employees who are ever Vigilant and expanding the limits of National Security to everyone on the caci team, I am proud of what you do every day for our company and for our nation, and to our shareholders, I thank you for your continued support of caci with that Jeanne. Let's hope the call for questions.

Operator: At this time, in order to ask a question, press star then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. For today's call, we do ask you to limit yourself to one question and one follow-up. Thank you. Your first question comes from the line of Jonathan Siegmann with Stifel. Please go ahead.

Speaker #5: Yeah, John, thanks. Well, it's definitely gotten larger. And it's not just in size but frankly in scale and just the absolute eye-watering capabilities that that national asset brings in.

Time in order to ask a question press star. Then the number 1 on your

If you would like to enjoy your question, press star 1 again.

For today's call, we do ask that you limit yourself to one question and one follow-up.

Thank you.

Speaker #5: Look, we don't just use that national asset term loosely. They're a 62-year-old company. They've been at the forefront of technology developments since the Cold War and outstanding track record of execution.

Your first question comes from the line of John Sigmund with Stifel. Please go ahead.

Jonathan Siegmann: Good morning, John, Jeff, and George. Thanks for taking my question.

Jon Siegmann: Good morning, John, Jeff, and George. Thanks for taking my question.

John Mengucci: Morning, John.

Jeffrey MacLauchlan: Morning, John.

Jonathan Siegmann: Congratulations on closing the transaction. Just a real quick one. Just with ARCA, and now that it's all integrated under one leadership, can you scale how big your space exposure is today?

Jon Siegmann: Congratulations on closing the transaction. Just a real quick one. Just with ARCA, and now that it's all integrated under one leadership, can you scale how big your space exposure is today?

Good morning, John, Jeff, and George. Thanks for taking my question.

Speaker #5: We've talked to the majority of the satellite primes. That utilize what ARCA provides in space. And just outstanding feedback, a consistent partner consistently delivering on schedule and within cost.

Congratulations on closing the transaction just uh a real quick 1 just uh with ARCA maybe can you and now that it's all integrated under 1 of the leadership? Can can you scale how big your space exposure is today?

John Mengucci: Yeah, John. John, thanks. Well, it's definitely gotten larger. Not just in size, but frankly in scale and just the absolute eye-watering capabilities that that national asset brings in. Look, we don't just use that national asset term loosely. They're a 62-year-old company. They've been at the forefront of technology developments since the Cold War, an outstanding track record of execution. We've talked to the majority of the satellite primes that utilize what ARCA provides in space, and just outstanding feedback, a consistent partner, consistently delivering on schedule and within cost. What drives the growth of space business further? Definitely Golden Dome. Some of the backlog numbers that Jeff mentioned earlier. Just to have an asset that has another $2 billion of non-competitive sole source franchise programs from which we're going to continue to expect revenue from, really does drive future growth.

Speaker #5: So what drives the growth of space business further? Definitely golden dome, some of the backlog numbers that Jeff mentioned earlier. Just to have an asset that has another $2 billion of non-competitive sole source franchise programs from which we're going to continue to expect revenue from.

Speaker #5: Really does drive future growth. All in all, today looking at space, you're looking at greater than $1 billion worth of total business with future growth that we see coming forward when we get talking about fiscal year 27.

Speaker #4: Appreciate that. And maybe I'll just ask one, Jeff, on margins because that was a pretty impressive for the quarter. Previously, you made statements quantifying the difference between tech and expertise, which was helpful for us.

Yeah, John John, thanks. Uh, well, it's, it's definitely, uh, it's definitely gotten larger, um, and, uh, and you know, it's not, not just in size, but frankly in scale and just the absolute eye, watering cap capabilities that that, uh, that that National Asset brings in. Um, look, they, uh, we don't just use that National Asset term loosely, you know, they're a 62 year old company. They've been at the Forefront of tech technology developments since the Cold War and outstanding, uh, track record of execution. Uh, we've talked to the majority of this, of the, uh, of the satellite primes that, uh, utilize what ARCA, uh, provides in space and just, uh, outstanding feedback. Uh, a consistent partner, a consistently delivering on schedule and, uh, within within costs, uh, you know, so what what drives the uh, both the space business further? Uh, definitely golden golden gold.

Speaker #4: Now that you've added the Super A's, ARCA, and Azure, is there any framework that we can think about of the relative margin differences between those two segments?

John Mengucci: All in all, today, looking at space, you're looking at greater than $1 billion worth of total business with future growth that we see coming forward when we get talking about fiscal year 2027.

Speaker #4: And any lumpiness or seasonality to keep in mind? Thank you very much.

Speaker #5: Yeah. Thanks, John. Look, I mean, you hit at an item that we're probably not going to provide a lot more specificity about around at least at this point.

Golden dome, uh, some of the backlog numbers that Jeff mentioned earlier, you know, just to have an asset that has another 2 billion dollars of non-competitive Soul Source, franchise programs from which we're going to continue to expect revenue from. Um, you know, really does Drive future future growth, all in all, uh, today, looking to space, you know, you you're looking at, uh, greater than a billion dollars worth worth of business, uh, with uh, with future growth that we see coming forward when we get talking about fiscal year 27,

Jonathan Siegmann: Appreciate that. Maybe I'll just ask one, Jeff, on margins, because that was pretty impressive for the quarter. Previously, you made statements quantifying the difference between tech and expertise, which was helpful for us. Now that you've added the Super As, Archon, and Azure, is there any framework that we can think about of the relative margin differences between those two segments, and any lumpiness or seasonality to keep in mind? Thank you very much.

Jon Siegmann: Appreciate that. Maybe I'll just ask one, Jeff, on margins, because that was pretty impressive for the quarter. Previously, you made statements quantifying the difference between tech and expertise, which was helpful for us. Now that you've added the Super As, Archon, and Azure, is there any framework that we can think about of the relative margin differences between those two segments, and any lumpiness or seasonality to keep in mind? Thank you very much.

Speaker #5: But clearly, the addition of these significant technology franchises is important in the evolution of the portfolio we've been talking about for some time. And the attendant margin expansion that comes with that.

Speaker #5: So I mean, you put your finger on something that we're not quite ready to quantify but the condition that you observe is clearly the case.

Speaker #5: I would add relative to the second part of your question, that that does come with a certain amount of lumpiness in terms of margin.

Jeffrey MacLauchlan: Yeah. Thanks, John. Look, you hit at an item that we're probably not going to provide a lot more specificity about around, at least at this point. Clearly, the addition of these significant technology franchises is important in the evolution of the portfolio we've been talking about for some time, and the attendant margin expansion that comes with that. You put your finger on something that we're not quite ready to quantify, but the condition that you observe is clearly the case. I would add, relative to the second part of your question, that does come with a certain amount of lumpiness in terms of margin. You can see that a little bit when you do the algebra around the Q4 margin, where we have particularly strong margins this year or this quarter.

Margin differences, between those 2 segments. Um and any lumpiness or seasonality to keep in mind. Thank you very much. Yeah, thanks John. Uh, look.

Speaker #5: And you can see that a little bit when you do the algebra around the fourth quarter margin, where we had particularly strong margins this year or this quarter.

Speaker #5: We're increasing our margin performance for the year. And you will quickly figure out that that probably means some lumpiness in the fourth quarter that goes the other way, the way this quarter went the right way.

You, I mean, you hit at an item that we're probably not going to provide a lot more specificity about, at least at this point. Um, but clearly, the addition of these significant technology franchises—

Speaker #5: So this is a little bit of a there is some variability around that that you've noted. Overall, however, we clearly are embarked have embarked on this strategy with the expectation that margin continues to go up and to the right.

It's important in the evolution of the portfolio. We've been talking about this for some time, and the attendant margin expansion that comes with that. So, I mean, you put your finger on something that we're not quite ready to quantify, but the condition that you observe is clearly the case.

Speaker #5: Despite an occasional quarterly bounce. Yeah. And John, let me also add on the revenue side. The expected financial contribution over the next 12 months that we shared with you all in December is still a creative revenue growth and margin.

I would add relative to the second part of your question. That that that does come with a certain amount of lumpiness, in terms of, uh, margin.

And you can see that a little bit, when you do the algebra around the fourth quarter margin.

Jeffrey MacLauchlan: We're increasing our margin performance for the year, and you will quickly figure out that probably means some lumpiness in the Q4 that goes the other way, the way this quarter went the right way. There is some variability around that you've noted. Overall, however, we clearly have embarked on this strategy with the expectation that margin continues to go up and to the right, despite an occasional quarterly bounce.

Speaker #5: But on the revenue side, revenue is not going to be linear. Folks, it's a technology business. You make deliveries, you book revenue, and you book profit.

Speaker #5: So unfortunately or fortunately, program schedules are really not congruent with quarter endpoints. So we can't apologize for that. It's very much like the rest of our technology business.

Where we have particularly strong margins this year, or this quarter. We're increasing our margin performance for the year and you will quickly figure out, uh, you know, that that probably means some lumpiness in the fourth quarter. Uh, that goes the other way. The way this quarter went the right way. So, you know, this is a little bit of a, uh, there is some, uh, there is some variability around that, that you've noted.

Speaker #5: So we'll do our best to estimate quarter to quarter, but this is a full year business. We've said that a lot. And ARCA is a fantastic growth addition for us as we move forward.

John Mengucci: Yeah. John, let me also add on the revenue side. The expected financial contribution over the next 12 months that we shared with you all in December is still accretive to revenue growth and margin. On the revenue side, revenue is not going to be linear, folks. It's a technology business. You make deliveries, you book revenue, and you book your profit. Unfortunately or fortunately, program schedules are really not congruent with quarter endpoints. We can't apologize for that. It's very much like the rest of our technology business. We'll do our best to estimate quarter to quarter, but this is a full year business. We've said that a lot. Archon is a fantastic growth addition for us as we move forward.

Overall, however, we clearly are a bark have embarked on this strategy with the expectation that margin continues to go up into the right, despite an occasional quarterly, you know, bounce.

yeah, and and John let me also add on the revenue side um,

Speaker #2: Right.

Speaker #3: Your next question comes from the line of John Godin with Citigroup. Please go ahead.

Speaker #5: John, you there? Operator, let's move on to the next question.

You know, the expected Financial contribution over the next 12 months that we shared uh with the wall in December is still uh a creative Revenue growth and and margin. But on the revenue side revenue is not going to be linear folks. It's a technology business you make deliveries you booked revenue and you book your book profit. So you know unfortunately or or fortunately program schedules

Speaker #3: Your next question comes from the line of Gavin Parsons with UBS. Please go ahead.

Speaker #6: Thank you. Morning.

Speaker #5: Morning, Gavin. John, you talked about this a bit, but maybe it's kind of a two-part question on the booking environment. It seems like the submits are building really nicely, but that's not converting to the pipeline.

Jeffrey MacLauchlan: Right.

Are really not congruent with quarter end points. So, you know, when we, we can't apologize for that. It's very much like the rest of our technology business. Uh, so we'll do our best to estimate quarter to quarter, but this is a full year business. We've set that a lot. Uh, and um, you know ARCA is a fantastic uh growth addition for us as we move forward.

Speaker #5: So I guess what are you seeing there? And then second on kind of funding, I think if I exclude ARCA, you're funded backlog was a high single digits.

Right.

Operator: Your next question comes from the line of John Godyn with Citigroup. Please go ahead.

Your next question comes from the line of John Gooden with Citigroup. Please go ahead.

Speaker #5: So is the funding environment still behaving better even if the award environment maybe isn't? Thanks. Yeah, Gavin, thanks. So let's unpack that. Look, we continue to see excellent visibility of strong pipeline.

John Mengucci: John? John, you there? Operator, let's move on to the next question.

John John, you there.

Operator, let's move on to the next question.

Operator: Your next question comes from the line of Gavin Parsons with UBS. Please go ahead.

Speaker #5: We see a really constructive macro forecast as we look forward. Let me just start with we're in the right places. We're investing ahead of need in the right capabilities.

Your next question comes from the line of Gavin Parsons with DBS. Please go ahead.

Gavin Parsons: Thank you. Good morning.

John Mengucci: Good morning, Gavin.

Thank you. Good morning.

Morning, Gavin.

Gavin Parsons: John, you talked about this a bit, but maybe it's kind of a two-part question on the booking environment. It seems like the submits are building really nicely, but that's not converting to the pipeline. I guess, what are you seeing there? Then second on kind of funding, I think if I exclude ARCA, your funded backlog was up high single digits. Is the funding environment still behaving better even if the award environment maybe isn't? Thanks.

Speaker #5: We're able to deliver them faster and more efficiently. That's exactly what the administration wants. But it's safe to say we're not a short-term hand-to-mouth business.

Speaker #5: We've got a large and growing backlog, as you mentioned, nearly $34 billion, which I'll add is up 7% year over year. Funded backlog up 19% year over year.

John Mengucci: Yeah, Gavin, thanks. Let's unpack that. Look, we continue to see excellent visibility, a strong pipeline. We see a really constructive macro forecast as we look forward. Let me just start with we're in the right places. We're investing ahead of need in the right capabilities. We're able to deliver them faster and more efficiently. That's exactly what the administration wants. It's safe to say we're not a short-term hand-to-mouth business. We've got a large and growing backlog, as you mentioned, nearly $34 billion, which I'll add is up 7% year over year. Funded backlog up 19% year over year, and a healthy trailing 12-month book-to-bill of 2.2. The last thing I'd like to share is, because I enjoy this statistic, a weighted average duration of backlogs on a rolling basis are greater than six years as we get through Q3.

John, you talked about this a bit, but maybe it's kind of a 2-part question on the, the booking the environment is it seems like the submits are building really nicely but the that's not converting to the pipeline. So I guess what, what are you seeing there? And then, second on kind of funding. I think, if I exclude ARCA, your funded, backlog was up high single digits. So as the funding environment, still behaving better, even if the award environment maybe isn't thanks.

Speaker #5: And a healthy trailing 12-month book to build on '22. And the last thing I'd like to share is because I enjoy this statistic, a weighted average duration of backlogs on a rolling basis are greater than six years.

Yeah, Gavin thanks. So let's let's unpack that um look we we continue to see excellent visits of visibility. Um,

Speaker #5: As we get through Q3. So funding trends, customer demand, and a potential $1.5 trillion GFY '27 budget, which includes reconciliation funding that definitely continues to support what we're looking at going forward.

Speaker #5: So we've talked about the fact that there's a number of short-term factors behind the slower award decision-making and we could spend the rest of the day and probably be 50/50 on reasons why there's a lot of money in budget.

A strong pipeline. We see a really constructive macro um for forecast is as we look forward. Uh let me just start with but we're in the right places we're investing ahead of ahead of need in the right type of abilities. Uh you know we're able to deliver them faster and more efficient efficiently. That's exactly what the administration wants, but it's safe to say, you know, we're not a short term hand of miles for business. We've got a large and growing backlog. As as you mentioned nearly 34 billion which I'll add is up 7% year-over-year.

Speaker #5: That does mean there's an awful lot of planning. Reconciliation funds are multi-year money. But at the end of the day, I can sum all that up by saying awards are lumpy.

Speaker #5: I like what our plan is. I like the pipeline. I like the bids submitted. And over the next couple of quarters, I fully believe that the government will go back to the days of awarding most programs within 100 or 300 days of when they plan, plan, do.

John Mengucci: Funding trends, customer demand, and a potential $1.5 trillion GFY27 budget, which includes reconciliation funding, definitely continues to support what we're looking at going forward. We've talked about the fact that there's a number of short-term factors behind the slower award decision-making, and we could spend the rest of the day and probably be 50/50 on reasons why. There's a lot of money in the budget. That does mean there's an awful lot of planning. Reconciliation funds are multi-year money. At the end of the day, I can sum all that up by saying awards are lumpy. I like what our plan is. I like the pipeline. I like the bids submitted. Over the next couple of quarters, I fully believe that the government will go back to the days of awarding most programs within 100 or 300 days of when they plan to.

Uh, funded backlog up, 19% year-over-year, uh, and a healthy trailing 12-month book to build on 22. So, and the last thing I'd like to share is because I enjoy this this, this stats, this statistic, a way to have restoration of backlogs on a rolling basis or greater than 6 years uh as we get through Q3 so funding Trends, uh, you know, customer demand.

And a potential 1.5 trillion dollar, uh, gfy 27 budget, which includes reconciliation funding, that definitely continues to support. Uh what we're looking at going going forward,

Speaker #5: And we'll continue to move forward. But at the end of the day, we're not a hand-to-mouth business. We are growing just fine. And we will continue to grow.

Speaker #5: And we'll get through this awards trough. And we'll continue to deliver. Jeff?

Speaker #2: Gavin, I would add to that. You noted the funded backlog increase the organic piece of that is 10%. I would also note that the sluggishness that we've seen in the acquisition and award structure and this is underscored by the backlog statistic.

Speaker #2: We just used we have not experienced in the administrative part of the contract administration so the government is by and large funding programs they're paying bills, they're processing invoices.

And then, you know, we could spend the rest of the day and probably be 50/50 on, you know, reason reasons why, you know, there's a lot of money in budget. Uh, that does mean there's awful lot of planning reconciliation funds are, um, multi-year money. But at the end of the day, I can sum all that up by saying awards are lumpy, you know, I I like what our um, plan is. I like the pipeline. I like the bits emitted and, you know, over the next couple quarters, I fully believe that the government will go back to the days of, you know,

John Mengucci: We'll continue to move forward. At the end of the day, we're not a hand-to-mouth business. We are growing just fine. We will continue to grow, and we'll get through this awards trough, and we'll continue to deliver. Jeff?

Speaker #2: Payment offices are working. The sluggishness in the awards mechanism has not translated into that side of the government.

Jeffrey MacLauchlan: Gavin, I would add to that. You noted the funded backlog increase. The organic piece of that is 10%. I would also note that the sluggishness that we've seen in the acquisition and award structure, and this is underscored by the backlog statistic we just used, we have not experienced in the administrative part of the contract administration. The government is by and large funding programs. They're paying bills. They're processing invoices. Payment offices are working. The sluggishness in the awards mechanism has not translated into that side of the government.

Speaker #5: Okay. Thanks, guys. And a long shot here, but guidance implies growth accelerates in 4Q. And you've got some pretty easy comps this year. So any early thoughts on if kind of the exit growth rate can continue into next year?

Awarding most programs within 100 or 300 days of when they plan and plan to do. And, you know, we'll, um, I continue to move forward, but at the end of the day, we're not handing them out business. We are growing just fine. Uh, and we will continue to grow and we'll get through this, you know, Awards, trough and we'll, uh, continue to deliver except Kevin I, I would add to that. Uh, you noted the funded backlog increase the organic piece of that is 10%.

Speaker #2: Yeah. We do see growth accelerating in the fourth quarter, which is always been the plan. And when I referred to the fact that we were seeing the growth acceleration we expected in the third, that was part of that.

Speaker #2: But I would also encourage you to keep John's comments in mind relative to the fact that the business is managed really to the year.

I would also note the sluggishness that we've seen in the acquisition and award structure, and this is underscored by the backlog statistic we just used. We have not experienced any administrative part of the contract administration. So the government is, you know, by and large funding programs—they're paying bills, they're processing invoices, payment offices are working. The sluggishness in the awards mechanism has not translated.

Speaker #2: And we have customers that have rhythmic buying patterns. Different times of year, they buy differently. And we typically have strong fourth quarter strong second half, and particularly fourth quarter, which we see again this year.

Into that side of, uh, that side of the government.

Gavin Parsons: Okay. Thanks, guys. A long shot here, but guidance implies growth accelerates in 4Q. You've got some pretty easy comps this year. Any early thoughts on if kind of the exit growth rate can continue into next year?

Thanks guys and, um, a long shot here, but, you know, guidance implies growth accelerates in 4 q and got some pretty easy comps this year. So, any early thoughts on, uh, if if kind of the exit growth rate can continue into next year,

Jeffrey MacLauchlan: Yeah. We do see growth accelerating in Q4, which has always been the plan. When I referred to the fact that we were seeing the growth acceleration we expected in Q3, that was part of that. I would also encourage you to keep John's comments in mind relative to the fact that the business is managed really to the year. We have customers that have rhythmic buying patterns, different times a year, they buy differently. We typically have strong H2 and particularly Q4, which we see again this year. I would encourage you to not think about that as an exit rate for the year. If you look over time at the distribution of our margin and revenue growth, you'll see that back-end-weighted trend, and I'd encourage you to not extend that into 2027 as we close out 2026.

Speaker #2: But I would encourage you to not think about that as an exit rate for the year. If you look over time at the distribution of our margin and revenue growth, you'll see that backend weighted trend.

Speaker #2: And don't I'd encourage you to not extend that into '27 as we close out '26.

Speaker #5: What if I added a comment about '27? I would encourage you to look forward to us continuing to deliver growth driving revenue, driving margins, driving free cash flow.

Speaker #5: And again, we wouldn't say that, but we're if we weren't very comfortable with our three-year targets.

Speaker #2: Yeah. The momentum in the business, that you see, is real.

Speaker #3: Your next question comes from the line of Gautam Khanna, with TD Cohen. Please go ahead.

Speaker #6: Good morning, guys. How are you doing?

Yeah, we do see growth accelerating in the fourth quarter, which has always been the plan. And when I referred to the fact that we were seeing the growth acceleration we expected in the third, that was part of that, but I would also encourage you to keep John's comments in mind relative to the fact that the business is managed really to the year. And we have customers, uh, that have, uh, you know, they have rhythmic buying patterns at different times of year and they buy differently, uh, and we typically have strong fourth quarter, strong second half, and particularly fourth quarter, which we see again this year. But I would encourage you to not think about that as an exit rate for the year. Um, if you look over time at the distribution of our margin and revenue growth, you'll see that back-end weighted, uh, trend and that, you know,

Speaker #5: Good morning.

Speaker #6: Good. Good day. I was just wanted to follow up on that last question. So I remember last quarter, you kind of explained the Q4 sequential ramp that's expected, JTMS, and some other programs.

John Mengucci: If I added a comment about 2027, I would encourage you to look forward to us continuing to deliver growth, driving revenue, driving margins, driving free cash flow. Again, we wouldn't say that if we weren't very comfortable with our three-year targets.

don't don't, I'd encourage you to not extend that into 27, uh, as as we close out, 26,

What if I added a comment about 27? I would encourage you to look forward to us continuing to deliver, um, you know growth

Speaker #6: I'm curious, though, why wouldn't those continue to be at a very high rate exiting the June quarter into the September quarter? Is there anything one-time with those specific contracts that are driving so much of the sequential growth that tapers off?

Jeffrey MacLauchlan: Yeah. The momentum in the business that you see is real.

Um, driving Revenue, driving margins, driving free cash, cash flow. Uh, and again you know, we wouldn't say that but we're if we weren't very comfortable with our with our 3 year targets,

Yeah, the momentum in the business, you know, that you see is real.

Operator: Your next question comes from the line of Gautam Khanna with TD Cowen. Please go ahead.

Speaker #6: And then I just wanted to get your broad perspectives on the fiscal '27 budget request and how that might benefit CACI and what parts of the business.

TV Cohen, please go ahead.

Gautam Khanna: Good morning, guys. How are you doing?

John Mengucci: Morning.

Good morning, guys. How you doing? Good morning.

Jeffrey MacLauchlan: Good morning.

Gautam Khanna: Good day. I just wanted to follow up on that last question. I remember last quarter you kind of explained the Q4 sequential ramp that's expected, JTMS and some other programs. I'm curious though, why wouldn't those continue to be at a very high rate exiting the June quarter into the September quarter? Is there anything one-time with those specific contracts that are driving so much of the sequential growth that tapers off? Then I just wanted to get your broad perspectives on the fiscal 2027 budget request and how that might benefit CACI, and what parts of the business and-

Speaker #5: So why don't I take the first part of that? Thanks, Gautam Khanna. And let John take the second part, the broader budget question. I would refer you back to the discussions that we've had about the different ramp profiles.

Good good. Ah, I was

Just wanted to follow up on that last question. So, I remember last quarter, you kind of explained the Q4—

Uh, sequential, you know, ramp, that's expected jtms, and some other programs.

Speaker #5: And there are a couple of things that are happening in the fourth quarter and the sequence from third to fourth. One is that we have a number of programs that ramp in sort of a have sort of a bimodal growth rate.

I I'm curious though. Why, why wouldn't those continue to be at a very high rate?

you know, exiting the June quarter into the September quarter is there

Anything 1 time with those specific contracts that are driving so much of the sequential growth.

uh, that—that tapers off, and then

Speaker #5: And one of the patterns that I talked about is a lot of these large agile software programs have an initial phase that is planning the second phase.

Jeffrey MacLauchlan: Why don't I take the first part of that. Thanks, Gautam. Let John take the second part, the broader budget question. I would refer you back to the discussions that we've had about the different ramp profiles. There are a couple things that are happening in Q4 and the sequence from Q3 to Q4. One is that we have a number of programs that ramp in sort of a bimodal growth rate. One of the patterns that I talked about is a lot of these large agile software programs have an initial phase that is planning, the second phase. There's acceleration and then a leveling off and then a re-acceleration. We're working through those phases right now on EITaaS, and to a lesser extent, NCAPS. We very much are in that mode for JTMS.

I just wanted to get your broad perspectives on the fiscal 27, budget request, and how that might uh, benefit khaki um in what parts of the business. And

so why why don't I think the first part of that, thanks quantum

Speaker #5: And so there's acceleration, and then a leveling off, and then a re-acceleration. We're working through those phases right now on ITAS, and to a lesser extent, NCAPs.

Speaker #5: We very much are in that mode for JTMS. And the other thing I would point out is that we do have in a number of the technology areas we do have customer communities that are particularly heavier buyers at different times of year often with increased activity in the fourth quarter of our fiscal year.

But, uh, unless John take the second part, the broader budget. Question, I would refer you back to the discussions that we've had about the different ramp profiles and uh, there are a couple things that are happening in the, in the fourth quarter and the and the sequence from third to Fourth,

Growth rate.

uh, and 1 of the 1 of the patterns that I talked about is

Speaker #5: And then the final variable is that we have a number of items we have a number of items where we're in the early stages of activities that are driving investment for future growth that is another variable in that mix.

a lot of these large agile software programs have an initial phase that is planning the second phase. And so there's acceleration and then a leveling off and then a re acceleration

Speaker #5: So the real answer is it's a portfolio. And while mixed sometimes feels like a handy explanation, there really are three or four substantive conditions that are in play here that come together from time to time with the outcomes that we try to suggest to you to expect.

Jeffrey MacLauchlan: The other thing I would point out is that we do have, in a number of the technology areas, customer communities that are particularly heavier buyers at different times a year, often with increased activity in the Q4 of our fiscal year. Then the final variable is that we have a number of items where we're in the early stages of activities that are driving investment for future growth. That is another variable in that mix. The real answer is it's a portfolio, and while mix sometimes feels like a handy explanation, there really are three or four substantive conditions that are at play here, and they come together from time to time with the outcomes that we try to suggest to you to expect.

We're working through those phases right now on eitas. Uh and and to a lesser extent end caps, we very much are in that mode for jtms.

Speaker #5: And the second part of your question around the '27 budget, look, larger budgets never hurt. We would have larger budgets than shrinking ones. But as I've said many, many times, we're going to pay much more attention to where the funds are flowing under the surface.

And the other thing I would point out is that we do have in a number of the technology areas. We do have, uh, customer communities that are particularly heavier buyers um, at different times of year often with uh with increased activity in the in the fourth quarter of our fiscal year.

Speaker #5: But what we see in the president's budget request looks very positive. The J-books, I think, came out earlier this week. So we'll be able to garner much more details from those as we build our fiscal '27, '28, and '29 plans.

Speaker #5: We're $300 billion TAM, and we're roughly a $10 billion company. So there's plenty of room for us to go grow we firmly believe that the electronic warfare and the counter-UAS areas, both in Department of War and in the DHS, show great promise.

And then the final variable is that we have a number of items. Uh, we have a number of items where we're in the early stages, um, of activities that are, uh, that are driving investment for future growth. That is another variable in that mix. So the real answer is, it's a portfolio. And and while mix sometimes feels like a handy, uh, explanation that really are 3 or 4, substantive conditions that are in play here, you know, and they come together from time to time with with the outcomes that uh

John Mengucci: The second part of your question around the 2027 budget. Look, larger budgets never hurt. We would rather have larger budgets than shrinking ones. As I've said many, many times, we're going to pay much more attention to where the funds are flowing under the surface. What we see in the president's budget request looks very positive. The J-Books, I think, came out earlier this week, so we'll be able to garner much more details from those as we build our fiscal 2027, 2028, and 2029 plans. We're a $300 billion TAM, and we're roughly a $10 billion company, so there's plenty of room for us to go grow. We firmly believe that the electronic warfare and the counter-UAS areas, both in Department of Defense and in the DHS, show great promise.

You know, that we try to, we try to suggest to you, to expect.

Speaker #5: We're having all the right meetings and planning sessions and doing the right things we need to do and making the right investments internally. So that we can meet those market needs.

Speaker #5: Space, really good on both the classified space programs we are really we are very strong in those future budgets, especially those that are in the FY20/27 plan.

Speaker #5: C5ISR and then IT modernization, both bringing in AI and doing network modernization. So very supportive of where we're going ahead. As I always say, more importantly is where the money's going.

Speaker #5: And we believe it's all going in the right spots that will drive future growth for the company in '27 and beyond. Thanks so much, Gautam.

John Mengucci: We're having all the right meetings, planning sessions, and doing the right things we need to do and making the right investments internally so that we can meet those market needs. Space, really good on both the classified space programs. We are very strong in those future budgets, especially those that are in the FY 2027 plan. C5ISR and then IT modernization, both bringing in AI and doing network modernization. Very supportive of where we're going ahead. As I always say, more importantly is where the money's going, and we believe it's going in the right spots that will drive future growth for the company in 2027 and beyond. Thanks so much, Gautam Khanna.

And and the second part of your question around. Uh the 27 budget look, you know, larger budgets never hurt. Uh we would have had larger budgets and shrinking ones. Um but as I've said many, many times, you know, we're going to pay much more attention to where the funds are flowing under the surface. Uh, but you know what? We see in the in the uh, in the president's budget request looks very positive. The J books. I think came out, uh, earlier this week. So we'll be able to Garner much more details from those as we build our fiscal 2728 and 29 plans. Um, you know, we we're 300 billion dollar Tam and we're roughly 10 billion dollar companies. So there's plenty of room for us to go grow. Um, you know, we we, uh, firmly believe that the electronic warfare and the counter uas areas, both in Department of war and in the DHS show a great promise for having all the right meetings and uh planning sessions. And I'm doing the right things we need to do and making the right Investments.

Speaker #6: Thank you.

Speaker #3: Your next question comes from the line of Scott Mikus with Melius Research. Please go ahead.

In internally so that we can meet those um, those um um, Market Market needs, um, space.

Speaker #7: Good morning. This is Matt Marottolo on for Scott Mikus. Good morning. Congrats on milestone C on the spectral. So as that program moves into LRIP and eventually into full-rate production, are there any challenges that you foresee your investments that need to be made to support the production ramp?

Speaker #7: And then how should we proceed with the margin benefit as it moves into production? Thank you.

Speaker #5: Yeah. Thanks. So look, we're extremely proud about where the spectral program is. That was a long road for us to achieve victory there. And an outstanding job with it.

You know, really good. Uh, on both the, uh, classified space programs. We, uh, are really, um, we are very strong in those, um, future budgets, especially those that are in the FY 2027 plan, uh, you know, C5ISR. And then IT modernization, you know, both bringing in AI and, uh, doing network modernization. So, uh, very supportive of where we're going going ahead. Um, you know, as I always say, more, more importantly is where the money is going, and we believe it's all going in the right spots. That will, uh, drive future growth for the company in '27 and beyond.

Jeffrey MacLauchlan: Thank you.

Thanks so much. Thank you.

Okay.

John Mengucci: You bet.

Operator: Your next question comes from the line of Scott Mikus with Melius Research. Please go ahead.

Speaker #5: So we did achieve and I'm sorry, we did receive milestone C. We are just beginning the LRIP portion. In the October/November timeframe, we'll be looking at sort of delivery zero.

Your next question comes from the line of Scott Mewcus with Melius Research. Please go ahead.

Matt Muratolo: Good morning. This is Matt Muratolo on for Scott Mikus.

Matt Marottolo: Good morning. This is Matt Muratolo on for Scott Mikus.

Good morning. This is Matt MTO on for Scott Mikus.

John Mengucci: Good morning.

Matt Muratolo: First off, congrats on Milestone C on Spectral. As that program moves into LRIP and eventually into full-rate production, are there any challenges that you foresee or investments that need to be made to support the production ramp? How should the market benefit as it moves into production? Thank you.

Matt Marottolo: First off, congrats on Milestone C on Spectral. As that program moves into LRIP and eventually into full-rate production, are there any challenges that you foresee or investments that need to be made to support the production ramp? How should the market benefit as it moves into production? Thank you.

Good morning. Good morning. Congrats on Mouse and see on spectral.

Speaker #5: Which is what we'll begin delivering some of the systems. On the investment side, as my preparing remarks stated, we invested long ahead of the award of that program.

Speaker #5: It makes certain that the brains of that system which is looking at multiple and tenant feeds and looking at all of the known threats and really providing a great AI baseline for naval combatant ships.

So as that program moves into LRIP and eventually into full-rate production, are there any challenges that you foresee or investments that need to be made to support the production ramp? And then how can CACI benefit as it moves into production? Thank you.

John Mengucci: Yeah, thanks. Look, we're extremely proud about where the Spectral program is. That was a long road for us to achieve victory there, and done an outstanding job with it. I'm sorry, we did receive Milestone C. We are just beginning the LRIP portion. In the October-November timeframe, we'll be looking at sort of delivery zero, which is what we'll begin delivering some of the systems. On the investment side, as my prepared remarks stated, we invested long ahead of the award of that program to make certain that the brains of that system, which is looking at multiple antenna feeds and looking at all of the known threats and really providing a great AI baseline for naval combatant ships. We've performed those investments.

Speaker #5: So that we've performed those investments. We have also continued CAPEX investments in our production facility in Melbourne. Where we are rolling out both C I'm sorry, C Inc. F and the spectral program.

Speaker #5: We've and we've continued to invest in this program driving frankly long lead item purchases slightly ahead of milestone C. So that we could take that timeline in between C and when we can deliver the first system down.

Speaker #5: It is an absolute proof point for us on our focus on excellent execution. It's a new large type program for us. But a great partnership with the Navy coupled with the right funding timing allows us to deliver to the well over 100 ships that are in the US Navy fleet today.

John Mengucci: We've also continued CapEx investments in our production facility in Melbourne, where we are rolling out both CEAF and the Spectral program. We've continued to invest in this program, driving frankly long lead item purchases slightly ahead of Milestone C so that we could take that timeline in between C and when we can deliver the first system down. It is an absolute proof point for us on our focus on excellence and execution. It's a new large-scale program for us, but a great partnership with the Navy coupled with the right funding timing allows us to deliver to the well over 100 ships that are in the U.S. Navy fleet today.

Speaker #7: Perfect. Thank you, guys. I'll stick to one question.

Speaker #5: Thank you. Thanks.

Speaker #3: Your next question comes from the line of Seth Seifman with JPMorgan. Please go ahead.

Speaker #7: Good morning, guys. This is Rocco on for Seth.

Speaker #5: Morning, Rocco.

Speaker #7: Rocco. How should we think about ARCA impacting margins moving forwards? You mentioned that quarter-to-quarter margins can be lumpy from the technology side of the business.

Speaker #7: But is the 11.6 that's implied for next quarter the right way to think about kind of the lower end of the new company margins post these deals?

Speaker #5: Yeah. The ARCA contribution in the fourth quarter is pretty consistent with our expectations. John mentioned the fact that this is a delivery and mixed business and very much not linear we gave some indication of margin in the December 22nd call.

For Naval, uh, combatant ships. So, we we've performed those Investments. We've also, uh, continued cap bikes investments in our, uh, production facility. In Melbourne, uh, where we are, uh, rolling out both, uh, C. Uh, I'm sorry, C8 F and the spectral program. Um, you know, we've, uh, and, and we've continued to invest in this uh, program, uh, driving uh, frankly long lead item purchases, uh, slightly ahead of my Milestone C so that we could take that timeline in between C and when we can deliver, uh, the first system down, uh, you know, it is an absolute proof point for us, uh, on our focus on execution. Uh, it's a new large type program for us, but a great partnership with the Navy coupled with, uh, the bright, the right funding timing allows us to deliver to the, you know, well over uh, 100 ships during the US Navy Fleet today.

Matt Muratolo: Perfect. Thank you, guys. I'll take the one question.

Matt Marottolo: Perfect. Thank you, guys. I'll take the one question.

John Mengucci: Thank you.

Thank you, guys. I'll take one question.

Jeffrey MacLauchlan: Thanks.

Thank you. And thanks.

Operator: Your next question comes from the line of Seth Seifman with J.P. Morgan. Please go ahead.

Your next question comes from the line of Seth.

Man, with JP Morgan, please go ahead.

[Analyst] (J.P. Morgan): Good morning, guys. This is Rocco on for Seth.

Rocco Barbero: Good morning, guys. This is Rocco on for Seth.

John Mengucci: Good morning, Rocco.

Good morning guys. This is Rock 1 for Seth.

Morning rockco.

[Analyst] (J.P. Morgan): How should we think about ARCA impacting margins moving forward? You mentioned that quarter-to-quarter margins can be lumpy from the technology side of the business, but is the 11.6 that's implied for next quarter the right way to think about kind of the lower end of the new company margins post these deals?

Rocco Barbero: How should we think about ARCA impacting margins moving forward? You mentioned that quarter-to-quarter margins can be lumpy from the technology side of the business, but is the 11.6 that's implied for next quarter the right way to think about kind of the lower end of the new company margins post these deals?

Speaker #5: But I would point out that within any particular quarter, around that average, you may see we may see three or four points swings in any particular quarter.

Uh, how should we think about ARCA impacting margins moving forward? You mentioned that quarter to quarter, margins can be lumpy from the technology side of the business, but is the 11.6% about kind of the lower end of the new company margins post these deals?

Jeffrey MacLauchlan: Yeah. The ARCA contribution in Q4 is pretty consistent with our expectations. John mentioned the fact that this is a delivery and mix business, and very much not linear.

Speaker #5: So I would I don't know if I'm getting exactly to the question that you asked. The ARCA expectation for the fourth quarter is well aligned with our expectation when we made that announcement.

Yeah, the arc of contribution in the fourth quarter is pretty consistent with our expectations.

Speaker #5: The organic business mix will be a softer quarter when you do that math.

John Mengucci: We gave some indication of margin in the 22 December call. I'd point out that within any particular quarter around that average, we may see three or four point swings in any particular quarter. I don't know if I'm getting exactly to the question that you asked. The Archon expectation for the Q4 is well aligned with our expectation when we made that announcement. The organic business mix will be a softer quarter when you do that math.

Jeffrey MacLauchlan: We gave some indication of margin in the 22 December call. I'd point out that within any particular quarter around that average, we may see three or four point swings in any particular quarter. I don't know if I'm getting exactly to the question that you asked. The Archon expectation for the Q4 is well aligned with our expectation when we made that announcement. The organic business mix will be a softer quarter when you do that math.

You know, John mentioned the fact that this is a delivery and mixed business, and very much not linear.

Speaker #7: Right. That makes sense. And then what type of directed energy capability does ARCA bring to CACI? And have they been fielded at this point?

Speaker #5: They bring a portion of directed energy. Things we can't talk about on the line. Yes, it's a new capability for us. We're not in the directed energy business prior.

You know, we gave some indication of margin, uh, in the December 22nd call, you know, but I would, uh, I'd point out that, you know, within any particular quarter, you know, around that average, you know, you may see we met, uh, you know, we may see 3 or 4 point swings in any particular quarter.

Speaker #5: And I think we'll be able to talk more on that in the quarters to come. I do want to touch back on your earlier question.

Speaker #5: Look, ARCA is a long-term play for us. It's probably one of the strongest acquisitions that we've done in terms of both doubling down on capabilities and customer relationships.

Uh, so I I would I don't know if I'm getting exactly to the question that you asked the mar the Arca expectation. For the fourth quarter is, is well aligned with our expectation. When we made that announcement, the organic business mix uh, will will be, uh, will be a softer quarter when you do that math.

[Analyst] (J.P. Morgan): Right. That makes sense. What type of directed energy capability does Archon bring to CACI? Have they been fielded at this point?

Rocco Barbero: Right. That makes sense. What type of directed energy capability does Archon bring to CACI? Have they been fielded at this point?

Speaker #5: And frankly, us owning and growing a price-based business in a market that's going to see valuations of those with such a strong space portfolio grow.

Right? That makes sense. And then, what type of directed energy capability does ARA bring to Khaki, and have they been fielded at this point?

John Mengucci: They bring a portion of directed energy, things we can't talk about on the line. Yes, it's a new capability for us. We're not in the directed energy business prior. I think we'll be able to talk more on that in the quarters to come. I do want to touch back on your earlier question. Look, Archon is a long-term play for us. It's probably one of the strongest acquisitions that we've done in terms of both doubling down on capabilities and customer relationships. Frankly, us owning and growing a price-based business in a market that's going to see valuations of those with such a strong space portfolio grow in the years to come. We've been able to do that all inside of a company that covered down on our transition and our interest costs, and still delivering $725 million of free cash flow.

Speaker #5: In the years to come, we've been able to do that all inside of a company that covered down on our transition and our interest costs.

Speaker #5: And still delivering 725 million dollars of free cash flow. So we're in the very early innings. We just got through integration on April 1st.

Speaker #5: I think we're still in the month of April. So in the first 20 or so days, we've gotten a lot done. And Andreas, who is running the combination of ARCA's business and our space business, has already making a major impact as to how we can continue to grow in space.

Uh, they bring a portion of directed enter energy things. We can't talk about on the line. Uh, yes. It's a new capability for us. We're not in the directed energy business, uh, prior uh, and I think we'll be able to talk more on that in the quarters to. Um, come I I I do want to touch back touch back on your, uh, on your earlier, question, look. Um, ARCA is a long-term play. Play play for us. It's probably 1 of the strongest actual positions that we've done in terms of both doubling down on capabilities and customer relation relationships.

Speaker #3: Your next question comes from the line of Toby Sommer with Truist Securities. Please go ahead.

Speaker #7: Thank you. If I think about the business from a really high-level mission tech expertise, etc., is it fair to think of mission techs in a makeshift of two to three points per year because of faster growth as well as generally speaking applying more capital on acquisitions in that direction?

John Mengucci: We're in the very early innings. We just got through integration on 1 April. I think we're still in the month of April. In the first 20 or so days, we've gotten a lot done. Andreas, who is running the combination of Archon's business and our space business, is already making a major impact as to how we can continue to grow the space.

And and you know, frankly us owning and growing a price based business in a market that's going to see valuations of those with such a strong space, portfolio grow in the years to come. We've been able to do that all inside of a company that covered down on our transition. Our transition in our interest costs is still delivering 725 million free cash flow. So, you know, we're in the

Speaker #5: Yeah. I think, Toby, that's broadly right. It's a hard thing to generalize. But the condition you observe is certainly true. And it's you're in the right you're on the right vector, to be sure.

Very early Innings, we just got to integration on April 1st. I think we're still in the month of April so in the first you know, 20 or so days, we've gotten a lot a lot done, uh and Andreas who is running uh the combination of arcus business and our space business is are you making a uh, a Major Impact as to how we can? We can continue to grow in space

Operator: Your next question comes from the line of Tobey Sommer with Truist Securities. Please go ahead.

Your next question.

Line of Toby Sommer with Truist Securities. Please go ahead.

Tobey Sommer: Thank you. If I think about the business from a really high level, mission tech expertise, et cetera, is it fair to think of mission techs in a mix shift of 2 to 3 points per year because of faster growth, as well as, generally speaking, applying more capital on acquisitions in that direction?

Speaker #7: And with respect to counter UAS, I was wondering if you could characterize what the experience in the war so far has meant to the opportunities that you see in front of you.

Speaker #7: And maybe how that has impacted customer conversations and decision-making.

I think about the business from a really high-level—Mission, Tech, expertise, etc. It’s fair to think of Mission, Tech, and a mix shift of 2 to 3 points per year because of faster growth as well, as generally speaking, applying more capital on acquisitions in that direction.

John Mengucci: Yeah. I think, Toby, that's broadly right. It's a hard thing to generalize, but the condition you observe is certainly true, and you're on the right vector, to be sure.

yeah, I

I think Toby that's

Speaker #5: Yeah. Toby, thanks. So look, let's start off with where we are in the counter UAS market. We're already in the government inventory. We've done doing this for a couple of decades.

It's a hard—it's a hard thing to generalize, but the condition you observe is certainly true. And it's, you know, you're in the right.

You're on the right vector, to be sure.

Tobey Sommer: With respect to counter-UAS, I was wondering if you could characterize what the experience in the war so far has meant to the opportunities that you see in front of you, and maybe how that has impacted customer conversations and decision-making.

Speaker #5: Merlin is our family of counter UAS systems. It is part of our broader $2 billion EW portfolio. And we do continue to expect growth from counter UAS in the foundational part of this is that we've actually we are able to sell it under two different vectors, under FAR Part 12, FAR Part 15.

And, um, with respect to counter-UAS, I was wondering if you could characterize what the experience in the war so far has meant.

To uh the opportunities that you see in front of you. Um, and maybe that has uh impacted customer conversations and decision-making.

John Mengucci: Yeah. Toby, thanks. Let's start off with where we are in the counter-UAS market. We're already in government inventory. We've been doing this for a couple of decades. Merlin is our family of counter-UAS systems. It is part of our broader $2 billion EW portfolio. We do continue to expect growth from counter-UAS. The foundational part of this is that we are able to sell it under two different vectors, under FAR Part 12, FAR Part 50. We can meet the administration's priorities, we're in place for world events, and the like. We are currently providing counter-UAS to all four of the armed services. We're in active discussions or negotiations with 16 other agencies and organizations across the federal government.

Speaker #5: So we can meet the administration's priorities. We're in place for world events. And the like. We are currently providing counter UAS to all four of the armed services for an active discussions and negotiations with 16 other agencies and organizations across the federal government.

Yeah. Toby Toby thanks. Um, so like let's let's start off. Um,

With where we are in the, uh, in the Country uas Market. Um, you know, we're, uh,

Speaker #5: And we already have, as I talked about in my prepared remarks, a system that's already been fully deployed on the southern border. So as you all know, it's our practice that anything competitive, we're not going to provide details.

Speaker #5: But we will absolutely be more than willing to share those details on the next quarterly call and in incremental press releases as we go forward.

we're already in the government inventory, but I'm doing this for a couple of up a couple of decades. Uh, Merlin is our family of, uh, County uas systems. Um, you know, it is part of our broader 2 billion dollar, ew portfolio. Uh, and we do continue to, uh, expect growth from uh, attorney OAS in the foundational part of this, is that we've actually, uh, we, we are able to sell it under 2 different vectors, under far Part, 12, far part for ft.

Speaker #5: On the international front, as an update, since our last call, we are now very active working sales in theaters through the US Army, Task Force 59, Giantta, 401, and CENTCOM for mobile counter UAS units.

So, we can meet the administration's priorities were in place for a world events.

um, and the like, um, we are currently providing concrete as

To All 4 of the armed services.

Speaker #5: We're getting kits prepared to support testing against one-way attack drones. And those are all the ones that have been in the news over the recent quarter.

We have active discussions or negotiations with 16 other agent agencies and organizations across the federal government.

John Mengucci: We already have, as I talked about in my prepared remarks, a system that's already been fully deployed on the southern border. As you all know, it's our practice on anything competitive. We're not going to provide details, but we will absolutely be more than willing to share those details on the next quarterly call and in incremental press releases as we go forward. On the international front, as an update, since our last call, we are now very active working sales in theater through the U.S. Army, 459th, JIATF-401, and CENTCOM for mobile counter-UAS units. We're getting kits prepared to support testing against one-way attack drones, and those are all the ones that have been in the news over the recent quarter.

Speaker #5: We have built established relationships with resellers to give us access into the Saudi, the Kuwait, and the Qatari markets. Through their ministries of defense, they're all at various stages of the process.

Uh, and we already have, as I talked about in my prepared remarks, uh, a system that's already been fully deployed on the southern, southern border.

Speaker #5: But you should expect those folks to be on board within 45 days. And we have to work through the exportability issues. So we are very strong in this market.

So as you all know, it's our practice or anything competitive, we're not going to provide to you details, but we will absolutely be more than willing to share those details on the next quarterly call. And then uh an incremental press releases as we we go forward on the international front uh as an update you know, since our last call we are now very active.

Speaker #5: We've talked about this for quite a long time. Current events are driving stronger demand. And as well as the 17 countries you've already delivered to EW to.

Uh, working sales in the theater, through the US, Army task force 59, China 401 and send and send con for mobile country. OS units.

John Mengucci: We have built established relationships with resellers to give us access into the Saudi, the Kuwait, and the Qatari markets through their Ministries of Defense. They're all at various stages of the process. You should expect those folks to be on board within 45 days, then we have to work through the exportability issues. We are very strong in this market. We've talked about this for quite a long time. Current events are driving stronger demand, and as well as the 17 countries we've already delivered EW to. Strong market, well-funded in the US through both reconciliation bills, adding billions to our TAM, which is what moved us to the $300 billion level. Really strong interest both domestically as you look at counter-UAS for Golden Dome, as well as other initiatives like the Eastern Flying Drone Wall.

We're getting kids prepared to support testing against one-way attack drones. And those are all the ones that, uh, have been in the news over the recent quarter.

Speaker #5: So strong market, well-funded in the US through both direct reconciliation bills, adding billions to our TAM, which is what moved us to 300 billion dollar level.

Speaker #5: And really strong interest both domestically as you look at counter UAS for counter UAS for golden dome. As well as other initiatives like the Eastern Flank Drone Wall.

We have, uh, built established relationships with resellers to give us access into the Saudi the, um, the um, Kuwait and the Qatari markets uh through their ministries of defense. They're all at various stages of um of um of of the process.

Speaker #5: So a lot of positive work here, putting the right dollars of investments in. You saw the CapEx is up slightly. Half of that was to ARCA.

But you should expect those folks to be on board within 45 days, and we have to work through the for-exportability issues.

Speaker #5: Half of that goes to our EW portfolio. And we are full speed ahead in how we want to grow this market.

So, um, you know, we—we are very strong in this market. We've talked about this for quite a long time. Uh, current events are driving, um, uh, stronger demand.

Speaker #7: Thank you very much.

Speaker #5: Thanks, Toby.

Speaker #8: You bet.

Speaker #3: Your next question comes from the line of Sheila Kahyaoglu, with Jeffrey's. Please go ahead, Sheila.

Speaker #9: Hi. Good morning, guys. Just one question for me. Great stuff on the funded backlog growing. John, despite the environment, maybe just honing in on your civil business, still solid growth there of 7%.

Speaker #9: What do you see? And how do we think about major program drivers within civil into fiscal '27?

John Mengucci: A lot of positive work here, putting the right dollars of investments in. You saw the CapEx is up slightly. Half of that was to Archon, half of that goes to our EW portfolio, and we are full speed ahead in how we want to grow this market.

Speaker #5: Yeah. There are a couple of things going on in civil Sheila. You can see the modest DHS headwinds. But you can also see the NASA NCAPs ramp.

Uh, on and, and as well as the 17w. So strong Market well-funded in the US through both direct reconciliation bills, um, adding billions to our tan, which is, which is what moved us to the $300 billion dollar level uh and really strong interest both. Uh domestically as you look at counter counter, you wiser, counter uas for golden golden, golden dome as well as other um initiatives like the Eastern Eastern uh, flank drone wall. So a lot of positive work here. Putting the right dollars of investments in. You saw the capex is up, you know, slightly.

Half of that was to ARCA, half of that goes to REW Port portfolio, and we are full speed ahead in how we want to grow this market.

Tobey Sommer: Thank you very much.

John Mengucci: Thanks, Toby.

Thank you very much.

George Price: You bet.

Jeffrey MacLauchlan: You bet.

Speaker #5: I mean, those would be the principal drivers of the change that you see.

Operator: Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Please go ahead, Sheila.

Speaker #9: Okay. Great. Thank

Sheila Kahyaoglu: Hi, good morning, guys. Just one question from me. Great stuff on the funded backlog growing, John, despite the environment. Maybe just honing in on your civil business, still solid growth there of 7%. What are you seeing and how do we think about major program drivers within civil into FY 2027?

Speaker #5: Sure. You're welcome.

Speaker #7: Operator?

Speaker #3: Your next question? Comes from the line of David Stress with Wells Fargo. Please go ahead.

John Mengucci: Yeah, there are a couple of things going on in civil, Sheila. You can see the modest DHS headwinds, but you can also see the NASA NCAPS ramp. Those would be the principal drivers of the change that you see.

You're nice. Question comes from the line of Sheila Kaya Ulu with Jeffries. Please go ahead, Sheila. Hi. Good morning, guys. Um, just one question for me. Um, great stuff on the funded backlog growing, John, despite the environment. Maybe just honing in on your civil business—still solid growth there of 7%. What are you seeing, and how do we think about major program drivers within civil into fiscal 2017?

Speaker #10: Hi. Good morning. This is Josh Korn. I'm for David.

Speaker #5: Hey, John.

Speaker #7: How are you?

Speaker #10: Oh. Hi. Wanted to follow up on the broader defense budget question. So I saw a note in the slides that the reconciliation funding is starting to flow through.

yeah, there are a couple things going on in civil, uh, Sheila, you can see the, the, the modest DHS headwinds, but you can also see, uh, the NASA encaps, uh, ramp

um,

Speaker #10: So I was wondering if there's any way you could quantify, I guess, to what extent your programs benefit from the base budget versus the reconciliation benefit from last year.

uh, so I mean those would be the Principal drivers of the change that you see,

Sheila Kahyaoglu: Okay, great. Thank you.

John Mengucci: Sure. You're welcome. Operator?

Speaker #10: And then any thoughts on what that might look like for 2027. Thanks.

Welcome.

Speaker #5: Yeah. So the majority of what we do and what we have been able to grow through is in the base budget. It will continue to be in the base budget because we have selectively decided in our summer markets to go after areas that are traditionally funded within the base.

Operator.

Operator: Your next question comes from the line of David Strauss with Wells Fargo. Please go ahead.

Your next question.

Comes from the line of David stress with Wells Fargo. Please go ahead.

Joshua Korn: Hi, good morning. This is Joshua Korn on for David.

Josh Korn: Hi, good morning. This is Joshua Korn on for David.

John Mengucci: Josh, how are you?

Hi, good morning. This is Josh corn on for David.

Speaker #5: On the reconciliation funding, we have seen those start to flow. They're really going to be very prevalent in golden dome. As well as border security.

Joshua Korn: Hi. I wanted to follow up on the broader defense budget question. I saw a note in the slides that the reconciliation funding is starting to flow through. I was wondering if there's any way you could quantify, I guess, to what extent your programs benefit from the base budget versus the reconciliation benefit from last year. Any thoughts on what that might look like for 2027. Thanks.

Josh Korn: Hi. I wanted to follow up on the broader defense budget question. I saw a note in the slides that the reconciliation funding is starting to flow through. I was wondering if there's any way you could quantify, I guess, to what extent your programs benefit from the base budget versus the reconciliation benefit from last year. Any thoughts on what that might look like for 2027. Thanks.

Speaker #5: We've seen some additional funding show up there. We're doing a lot of AI-based object tracking tech. As well as additional spend in our counter UAS area.

John Mengucci: Yeah. The majority of what we do and what we have been able to grow to is in the base budget. It will continue to be in the base budget because we have selectively decided in our core markets to go after areas that are traditionally funded within the base. On the reconciliation funding, we have seen those start to flow. They're really going to be very prevalent in Golden Dome, as well as border security. We've seen some additional funding show up there. We're doing a lot of AI-based object tracking tech, as well as additional spend in our counter-UAS area. We are currently modernizing the Space Force critical infrastructure through reconciliation funding. Again, you can directly tie that to things in the Golden Dome area. In the intelligence world, we continue to enhance what we do in the left-of-launch area around situational awareness.

Speaker #5: We are currently modernizing the Space Force critical infrastructure through our reconciliation funding. Again, you can directly tie that to things in the golden dome.

Oh hi wanted to follow up on the broader uh defense budget question. Uh so I found note in the slides that that the reconciliation funding is is starting to flow through. So I was wondering if there's any way you could um, quantify. I guess to what extent your programs benefit from the the base budget versus the reconciliation benefit from last year. Um and then any thoughts on what that might look like for uh 2027? Thanks.

Speaker #5: In the intelligence world, we're continuing to enhance what we do in the left of launch area. Around situational awareness. And then in IT modernization, we have a lot of large enterprise systems that we're looking to try to make common across the Department of War.

Speaker #5: So at the Army has a picture-perfect enterprise system doing X. We are pushing to have that same solution be used through the rest of the Department of War.

Yeah. So uh uh the majority of what we do and what we uh um um have been able to grow through is in the face budget. It will continue to be in the base budget because we have selectively decided, our summer markets to go after areas that are uh, traditionally funded within the um, within within the base, uh, on the rec reconciliation funding. Uh, we have seen those start to flow, they're really going to be very, uh, prevalent in Golden in golden dome, uh, as well as, uh, borders security. We've seen some, uh, additional funding show up there. We're doing a lot of, uh, AI based, uh, object, tracking Tech, uh, as well as um, additional spend in our power.

Speaker #5: So I mean, a lot of nice funding. And whether it's already T&E or in procurement versus O&M, it doesn't quite matter to us. We're always doing modernization through sustainment, which is a large use of O&M funding.

Speaker #5: And clearly, as our business continues to evolve, we'll see increasing amounts of already T&E funding. So really well-funded to close out 2026. And just as nicely funded as we go forward in the fiscal year '27.

John Mengucci: In IT modernization, we have a lot of large enterprise systems that we're looking to try to make common across the Department of Defense. If the Army has a picture-perfect enterprise system to annex, we are pushing to have that same solution be used through the rest of the Department of Defense. A lot of nice funding. Whether it's RDT&E or in procurement versus O&M, it doesn't quite matter to us. We're always doing modernization through sustainment, which is a large use of O&M funding. Clearly, as our business continues to evolve, we'll see increasing amounts of RDT&E funding. Really well-funded to close out 2026 and just as nicely funded as we go forward into fiscal year 2027.

Front of uas area. Uh we are currently modernizing the space force critical infrastructure to reconciliation funding. Again, you can directly tie that due to things in the golden dome area uh, in the Intel intelligence world where uh, we continue to enhance what we do in the left of launch area around situational awareness.

Speaker #10: Great. Thank you.

Speaker #5: You bet. Thank you.

Speaker #3: Your next question comes from the line of Mariana Perez-Mora with Bank of America. Please go ahead.

Speaker #11: Hey, guys. This is Alex Preston from Mariana this morning. How are you?

Speaker #8: Alex.

Speaker #11: I just wanted to go back to NASA and the civil side real quick. Given the sort of budget fluctuations there in FY '27, right?

Speaker #11: Obviously, it's a request called for, again, pretty significant cuts year over year. But there's also this shift towards exploration away from pure science. So there's a bit of a dynamic there.

Speaker #11: I'm just curious if you had any sort of broad puts and takes on that budget request and where you see CACI and ARCA playing within that context?

Uh, and then an IT modern modernization. We have a lot of large, um, Enterprise systems that we're looking to try to make common across the department of War. So if the Army has a, you know, Picture Perfect, uh, enterprise system, do we X, we we are, we are pushing to have that same solution be used through the, uh, the rest of the Department of War. Um, so I mean, a lot of nice funding, uh, and whether it's already te or or, uh, in procurement versus om, it doesn't quite matter to us. We're always doing, um, a modernization through sustainment, which is a um, a large use of own Heaven funding and clearly as our business continues to evolve, uh we'll see increasing amounts of RV. Our funding so really well funded to close out 2026 and just as nicely funded as we go forward. In the fiscal year 27,

Joshua Korn: Great. Thank you.

Josh Korn: Great. Thank you.

John Mengucci: You bet. Thank you.

Great. Thank you.

Yeah, you bet. Thank you.

Operator: Your next question comes from the line of Mariana Perez Mora with Bank of America. Please go ahead.

Speaker #11: Thanks.

Speaker #5: Yeah. So I guess where I'm both sides of that, right, Alex? Let's start with NASA. I'm in CAPS first. We continue to successfully ramp that program.

Your next question comes from the line of Mariana Perez Mora with Bank of America. Please go ahead.

Alexander Preston: Hey, guys. This is Alexander Preston on for Mariana this morning. How are you?

Alex Preston: Hey, guys. This is Alexander Preston on for Mariana this morning. How are you?

John Mengucci: Alex, chill.

Speaker #5: We're receiving very high price from our customer. So what we're deploying there is a commercial agile-scale delivery model to really standardize and centralize software development across NASA.

Uh hey guys, this is Alex Preston from Ariana this morning. How are you?

Alexander Preston: I just wanted to go back to NASA and the civil side real quick. Given the sort of budget fluctuations there in FY 2027, right? Obviously, the request called for, again, pretty significant cuts year over year. There's also this shift towards exploration away from pure science. There's a bit of a dynamic there. I'm just curious if you had any sort of broad puts and takes on that budget request and where you see CACI and ARCA playing within that context. Thanks.

Alex Preston: I just wanted to go back to NASA and the civil side real quick. Given the sort of budget fluctuations there in FY 2027, right? Obviously, the request called for, again, pretty significant cuts year over year. There's also this shift towards exploration away from pure science. There's a bit of a dynamic there. I'm just curious if you had any sort of broad puts and takes on that budget request and where you see CACI and ARCA playing within that context. Thanks.

Um, I just wanted to go back to NASA and the Civil side real quick. Um,

Given the.

Speaker #5: So very similar to what we have done with customers in Border Patrol on Beagle. So the way to think about that work in terms of budgets and administration priorities, we're reducing software development times.

Sort of budget fluctuations there in FY 27, right? Obviously Forest called for again pretty significant Cuts here over a year.

Speaker #5: We're increasing efficiency. We're bringing administrative systems across NASA into compliance with the plethora of federal reporting requirements. And we've got all key metrics, and we're supporting, I think, eight to nine hundred different applications in the platforms.

But there's also this shift towards exploration away from Pure science. So, there's a bit of a dynamic there. I'm just curious if you had any sort of broad puts and takes on, um,

John Mengucci: Yeah. I guess we're on both sides of that, right, Alex? Let's start with NASA NCAPS first. We continue to successfully ramp that program. We're receiving very high praise from our customer. What we're deploying there is a commercial agile scale delivery model to really standardize and centralize software development across NASA. Very similar to what we have done with Customs and Border Protection on Beagle. The way to think about that work in terms of budgets and administration priorities, we're reducing software development times, we're increasing efficiency, we're bringing administrative systems across NASA into compliance with the plethora of federal reporting requirements. We've got all key metrics, and we're supporting, I think, 800 to 900 different applications in the platforms. There's no work. I'm sorry, there's no impact to the work that we are doing.

Speaker #5: So there's no work I'm sorry, there's no work. There's no impact to the work that we are doing but you should see that by driving commonality and moving NASA and their software development frameworks forward closer to the way that commercial companies do their software development practice, as well as the ACI, it's going to generate cost savings across the organization.

Speaker #5: A nice thing for us, it supports the theme of NASA wanting to reduce their reliance on outside headcount and push those dollars more into mission, which is fantastic for us as we look at our space business.

That budget request and where you see khaki and ARCA playing within that context. Thanks. Yeah. So I guess we're on both sides of that. Right. Alex. Uh let's start with NASA and caps. First, you know, we're we continue to successfully ramp that program. We're receiving very high price from our customer. Uh, so what we're deploying there is a commercial address scale delivery model to really standardize and centralize software development across NASA. So, very similar to what we have done with Customs and Border Patrol on beagle. So, the way to think about that work in, in terms of budgets and administration priorities for reducing these software development times, we're increasing efficiency, we're bringing administrative systems across

Speaker #5: So it is the organization that really is taking full advantage of what we're doing on the one part of our business, driving agile software development practices and putting DevSecOps in place.

NASA into compliance with, um, with the, you know, plethora of federal reporting requirements and we've got all key metrics metrics. And we're supporting, I think 8 to 900 different applications in the platform.

So, there's no work. I'm sorry, there's no work.

Speaker #5: That's been saving the organization money and even sweeter news is we're on the receiving end of that as we look at what we do in space.

John Mengucci: You see that by driving commonality and moving NASA and their software development frameworks forward, closer to the way that commercial companies do their software development practice, as well as CACI, it's going to generate cost savings across the organization. A nice thing for us, it supports the theme of NASA wanting to reduce their reliance on outside headcount and push those dollars more into mission, which is fantastic for us as we look at our space business. It is the organization that really is taking full advantage of what we're doing on one part of our business, driving agile software development practices and putting DevSecOps in place that's been saving the organization money. The even sweeter news is we're on the receiving end of that is look at what we do in space.

Speaker #5: So very much aligned not a funding threat to where we're going. On that CAPS and how that will continue to ramp to support '27 growth rates.

Speaker #11: Great. Thank you. Really appreciate the color.

Speaker #5: You bet.

Speaker #3: Your next question comes from the line of John Godin with Citigroup. Please go ahead.

Speaker #12: Hi. This is Jeremy Jason. I'm for John Godin. Thank you for squeezing me in. So I just wanted to ask as we think about these complex sort of technical solutions, transitioning from development to production, like spectral, I kind of wanted your take on what your outlook is for the scalability of these technologies across different customers and upcoming budget cycles.

John Mengucci: Very much aligned, not a funding threat to where we're going on NCAPS and how that will continue to ramp to support 2027 growth rates.

Speaker #12: And could that, in theory, be sort of affected by a potential blue wave? Thanks.

Cost savings across the Oregon organization and nice thing for us. It supports the theme of nasty 1 and to reduce their Reliance on, you know, outside hat, count and push those dollars more into Mission which is fantastic for us as we look at our space business. So it is, it is the organ organization that really is taking full advantage of what we're doing. In 1, part of our business driving agile software development practices and putting steps back opiates in place. That's been saving the organization money. And the even sweeter news is, we're on the receiving end of that is looked at what we do in, uh, space. So very much aligned not a funding threat to where we're going uh on that caps on on that caps and how that uh will continue to ramp to support 27, growth rates.

Speaker #5: Yeah. The nice thing I'll take your last comment first. The beautiful thing of being an investor in CCI is a number of years back when we set this company on its next course, we spent a lot of time looking strategically at the kind of markets we wanted to support and the parts of the federal government we were going to be very focused on.

Alexander Preston: Great. Thank you. Really appreciate the color.

Alex Preston: Great. Thank you. Really appreciate the color.

John Mengucci: You bet.

Operator: Your next question comes from the line of John Godden with Citigroup. Please go ahead.

Great. Thank you. Really appreciate the call. Bye.

Your next question comes from line of John Gooden with cgroup, please go ahead.

Jeremy Jason: Hi, this is Jeremy Jason on for John Godden. Thank you for squeezing me in. I just wanted to ask, as we think about these complex sort of technical solutions transitioning from development to production, like Spectral, I kind of wanted your take on what your outlook is for the scalability of these technologies across different customers and upcoming budget cycles, and could that in theory be sort of affected by a potential blue wave? Thanks.

Speaker #5: Mark my words, it's no accident that we're focused on national security, which is DOD, the intelligence community, and DHS all, dot, dot, dot, which are fully have bipartisan support.

Speaker #5: Blue rays, waves, red waves, purple waves doesn't much matter to where we're doing things. We're in very critical areas that the government tomorrow morning will not decide to just turn off.

Hi, this is Jeremy. Jason, I'm from John Garden. Um, thank you for speaking me in. Uh, so I just wanted to ask um, as we think about these complex sort of Technical Solutions transitioning from development to production, like, like spectral. I kind of wanted your take on, uh, what your outlook today is or the scalability of these Technologies across, you know, different customers, and upcoming budget Cycles.

And could that in theory, be sort of affected by a potential Blue Wave. Thanks,

John Mengucci: Yeah. I'll take your last comment first. The beautiful thing of being an investor in CACI is a number of years back when we set this company on its next course, we spent a lot of time looking strategically at the kind of markets we wanted to support and the parts of the federal government we were going to be very focused on. Mark my words, it's no accident that we're focused on national security, which is DoD, the intelligence community, and DHS, all of which fully have bipartisan support. Blue waves, red waves, purple waves doesn't much matter to where we're doing things. We're in very critical areas that the government tomorrow morning will not decide to just turn off. First and foremost, that's where we're at.

Speaker #5: So first and foremost, that's where we're at. So if we talk about systems that we're out there doing, counter UIS, spectral, work we're doing in agentic AI, those are all things that scale wonderfully as we move forward.

Speaker #5: Our optical communication terminals, beyond the two and four watt perforated Leo systems, to very exquisite systems. So spectral, its scale and scalability is to deliver the baseline.

Yeah. Um, you know, the nice thing, I'll I'll take your last comment first. Uh, the um, the the beautiful thing of being an investor in CCI is a number of years. Back, when we set this company on, its next course, we spent a lot of time looking strategically at the kind of markets, we wanted to support and the, uh, parts of the federal government, we were going to be very focused on

mark my words, it's no accident that we're focused on National Security, which is DoD the intelligence community in DHS all

Speaker #5: We've agreed upon. To over well over 100 combatant ships. And then move into the FMS side of where spectral goes. On top of the FMS work is all the topside and internal work that we and the army believe should be the next phase of spectral.

John Mengucci: We talk about systems that we're out there doing, Counter-UAS, Spectral, work we're doing in agentic AI, those are all things that scale wonderfully as we move forward. Our optical communication terminals beyond the 2- and 4-watt proliferated LEO systems to very exquisite systems. Spectral, its scalability is to deliver the baseline we've agreed upon to well over 100 combatant ships and then move into the FMS side of where Spectral goes. On top of the FMS work is all the top side antenna work that we and the Army believe should be the next phase of Spectral, so we can secure even more signals from those top side antennas and be able to drive processing improvements that will protect ships not only from missiles, but also from drones.

Speaker #5: So we can secure even more signals from those topside and internals and be able to drive processing improvements that will protect ships from not only from missiles but also from drones.

Speaker #5: And the counter UIS area, we have been scaling up production capabilities in Sterling and in Melbourne. To be able to deliver Merlin, it's a tough supply chain right now.

Speaker #5: There's a lot of people buying flat, flat panel radars. But what differentiates us there, frankly, and how we enhance it going forward is the software capability of that system.

Dot, dot dot, dot, which are fully, uh, have bipartisan support, uh, Blu-rays ways, red ways, purple ways doesn't much matter to where we're doing things. We're in very critical areas that the government tomorrow morning will not decide to just turn off. So, first and foremost, that's where we're at. So, if we talk about systems that were out there doing counter uas, spectral work, we're doing in agentic AI. Uh, those are all things that scale wonderfully as we move forward. Uh, our opto could communication terminals beyond the 2 and 4 watt. Um um, uh uh perforated, um, Leo systems uh to very Exquisite systems. So Spectrum, uh spectral its scale scalability is to deliver the Baseline. We've agreed upon to, you know, over well over 100, combatant ships and then move in.

Speaker #5: So it's not so much of always having to update hardware and whether this is fly-by-wire drones, one-way attack drones, cellular drones, you name it.

Speaker #5: We've already seen them all over the planet. So we are more than able to scale forward from that position as well. And we can talk a lot about optical communication terminals and everything else we've done in the tech area.

John Mengucci: In the counter-UAS area, we have been scaling up production capabilities in Sterling and in Melbourne to be able to deliver Merlin. It's a tough supply chain right now. There's a lot of people buying flat panel radars. What differentiates us there, frankly, and how we enhance it going forward is the software capability of that system. It's not so much of always having to update hardware, and whether this is fly-by-wire drones, one-way attack drones, cellular drones, you name it, we've already seen them all over the planet. We are more than able to scale forward from that position as well. We can talk a lot about optical communication terminals and everything else we've done in the tech area, but they all follow that common theme, right? You need to understand mission so that you can deliver.

Speaker #5: But they all follow that common theme, right? You need to understand mission so that you can deliver. We hear a lot about AI and how that's going to move different parts of our business forward.

Speaker #5: Frankly, AI without mission is like a car without gas. It's great to look at. You really can't do much with it. So we've been able to scale AI use throughout a lot of what we do.

Speaker #5: And we're looking forward to driving growth further and fiscal year '27.

Speaker #3: Your next question comes from the line of Jan Engelbrecht with Baird. Please go ahead.

Into the FMS side and we're spectral goes on top of the FMS work is all the top side ends. I don't work that we and the Army believes should be the next phase of spectral. So we can uh, uh uh secure even more signals from those top side ends. And as and be able to, um, uh, Drive processing improvements that will protect ships from not only from missiles, but also from drones and the county us area. Uh, we have been scaling up, uh, production cap capabilities in Sterling and Melbourne, uh, to be able to deliver Maryland. Uh, it's a tough supply chain, all right, right now, there's a lot of people buying flat flat panel Radars. Uh but what differentiates us there, frankly, and how we enhance it going forward, is the software capability of that system. So it's not so much. I've always have an update Hardware. Uh, and whether this is, uh, 5 by wire drones 1 way attack drones cellular drones, uh, you name it. We've already seen them all over the planet. Uh, so we are, um,

Speaker #11: Good morning, John, Jeff, and George. Congrats on another good quarter. I wanted to talk about the Arca and legacy CACI space portfolio. And I was just wondering sort of is there an ability to sort of I wouldn't say sort of cross-sell, but how do you combine those capabilities into sort of a solution for the customer?

More than able to, um, scale forward from that position as well. And we can talk a lot about Optical communication and terminals or anything else we've done in the tech area, but they all follow that common theme, right? You need to understand mission.

John Mengucci: We hear a lot about AI and how that's going to move different parts of our business forward. Frankly, AI without mission is like a car without gas. It's great to look at, but you really can't do much with it. We've been able to scale AI use throughout a lot of what we do, and we're looking forward to driving growth further in fiscal year 2027.

Speaker #5: Yeah. Thanks, John, in front. Probably the most prolific revenue synergy we have is going to be on the ground processing side, where Arca already has authorizations to operate agentic AI solutions and a number of different a number of different mission models that allow them to process and find different things in the geo instream.

So that you can deliver, you know we hear a lot about um uh Ai and how that's going to move you know different parts of our business forward. So frankly AI without mission is like a car without gas. It's great to look at we really can't do much with it.

So we've been able to scale AI use throughout a lot of what we, uh, do. And we're looking forward to driving growth further and fiscal year 27.

Operator: Your next question comes from the line of Jan-Frans Engelbrecht with Baird. Please go ahead.

Your next question comes from the line of Jan angle. Brex with bear. Please go ahead.

Jan-Frans Engelbrecht: Good morning, John, Jeff, and George. Congrats on another good quarter. I wanted to talk about the ARCA and legacy CACI space portfolio, and I was just wondering, is there an ability to sort of, I wouldn't say sort of cross-sell, but how do you combine those capabilities into a sort of a solution for the customer?

Good morning, John Jeff and George uh congrats on another good order.

Speaker #5: We are just as adept on the SIGIN side, but we have not moved to agentic AI on that side. We're just beginning to have customer meetings given that we just got everything integrated.

Speaker #5: So there are revenue synergies there that haven't even begun that will allow us to move the intelligence community further down the path that we know that they want to move towards, which is getting to higher-level multi-int solutions.

John Mengucci: Yeah. Thanks, Jan Engelbrecht. Probably the most prolific revenue synergy we have is going to be on the ground processing side, where ARCA already has authorizations to operate agentic AI solutions and a number of different mission models that allow them to process and find different things in the GEOINT stream. We are just as adept on the SIGINT side, but we have not moved to agentic AI on that side. We're just beginning to have customer meetings, given that we just got everything integrated. There are revenue synergies there that haven't even begun that will allow us to move the intelligence community further down the path that we know that they want to move towards, which is getting to higher level multi-INT solutions. The other area that we're already connecting is, how do we go about building larger scale optical communication terminals?

Uh, cross-sell. But look, how do you combine those capabilities into a sort of solution for the customer?

Yeah, thanks, Sean France. Uh, you know probably the most uh prolific

Uh, Revenue Synergy. We have is going to be on the ground processing side where um,

Speaker #5: The other area that we're already connecting is, hey, how do we go about building larger-scale optical communication terminals? Larger ones or ones of the same size that need to push a terabit of data through them.

Speaker #5: They're versus two to four meg. Arca is a 60-plus-year space company. We are a six-plus-year space company. In the world of optics. So there's a lot of synergies already taking place there.

Speaker #5: We're looking at different ways that we can get through production; we're looking at different ways we can do engineering. So there's just so much more we can be doing for the folks who build satellites and the customers who absolutely need information from those missions.

Speaker #5: So really excited about what the future brings for us.

John Mengucci: Larger ones or ones of the same size that need to push a terabit of data through them versus 2 to 4 meg. ARC is a 60+ year space company. We are a 6+ year space company in the world of optics. There's a lot of synergies already taking place there. We're looking at different ways that we can get through production. We're looking at different ways we can do engineering. There's just so much more we can be doing for the folks who build satellites and the customers who absolutely need information from those missions. Really excited about what the future brings for us.

Speaker #11: Thanks, John. Very helpful. And then a quick follow-up if I may. Just if we look at FY '27, and you've obviously got great visibility into this business.

Where ARCA already has authorizations to operate, agentic, AI Solutions, and a number of different found a number of different. Um uh Mission Models that allow them to process and find different things in the Geo in stream. Uh, we are just as Adept on the Sig side, but we have not moved to a gentic AI on that, on that side, we're just beginning to have customer meetings given that, we just got everything in in integrated. Uh, so there are Revenue synergies there. That haven't even begun that will allow us to move the intelligence Community further down the path that we know that they want to move towards which is getting to um, higher level multi- in Solutions. The other area that where, that we're already connecting. Is a, how do we go about building? Larger scale? Optical communication terminals, you know, larger ones or ones of the of the same side?

Speaker #11: It's close to four years of annual revenue in the backlog. But any sort of large multi-year contracts that you've bid on, sort of multi-billion dollar contracts that you expect to be adjudicated in FY '27 or any sort of notable recompetes that we should look out for in the next 12 months?

Speaker #5: Yeah. I think on the new business front, excuse me, we're always have a number of multi-billion dollar things that are rumbling around at different stages.

Speaker #5: Do we have some jobs that are over a billion dollars that are going to be awarded in the fiscal year '27? Absolutely so. And frankly, we were looking at some of those to be awarded towards the end of '26.

Jan-Frans Engelbrecht: Thanks, John. Very helpful. Then a quick follow-up, if I may. If we look at FY 2027, and you've obviously got great visibility in this business. It's close to four years of annual revenue in the backlog. Any sort of large multi-year contracts that you've bid on, sort of multi-billion dollar contracts that you expect to be adjudicated in FY 2027 or any sort of notable recompetes that we should look out for in the next 12 months?

The need to push. You know, a terror bit of data through them there versus 2 to 2, to 2 to 4 Meg. Uh, you know, Arc is a 60 plus year space company. You know, we are a 6 Plus year space company, uh, in the world of Optics. So, uh, you know, there's a lot of surgeries, are we taking place there? Uh, we're looking at different ways that we can get through production. We're looking at different ways we can do engineering. Uh, so there's just so much more we can be doing for the folks who build satellites and the customers who absolutely need information from those uh missions. So really excited about what the, uh, future future brings for us.

Speaker #5: But we clearly were not there, but we'll be able to report on how '26 will wrap up and how we go forward within '27.

Speaker #5: On there, it can be front. This was this year, 2026, has been a really large year for us. As I think Jeff mentioned during his prepared remarks, we're already greater than 90% on there.

John Mengucci: Yeah, I think on the new business front, we always have a number of multi-billion dollar things that are rumbling around at different stages. Do we have some jobs that are over $1 billion that are going to be awarded in fiscal year 2027? Absolutely so. Frankly, we were looking at some of those to be awarded towards the end of 2026. Clearly we're not there, but we'll be able to report on how 2026 wrapped up and how we go forward within 2027. On the ECP front, this year, 2026, has been a really large year for us. As I think Jeff mentioned during his prepared remarks, we're already greater than 90% on the ECP front.

Thanks John very helpful and then a quick follow up. If I if I may just in if we look at if by 27 and you've got obviously got great visibility in the business. It's close to 4 years of annual annual revenue in the backlog. But any sort of large multi-year contracts that you've bid on sort of multi-billion dollar contract that you expect to be adjudicated in FY 2 7.

Speaker #5: It can be front. And what's just as exciting is the fact that future recompetes that were to come up in the first quarter, so '27, have already been extended by 18 to 24 months, which is really a great way to win recompetes, right, is to never have to bid on them.

Speaker #5: You only get there when customers recognize the areas that we're in, the importance of national security of the areas that we're in, and the level of performance we've had.

Yeah, I think on the on the new business front, excuse me. Um, you know, we're always we always have a number of multi-billion dollar things that are rumbling around at different stages. Uh, you know, do we have some jobs that are over a billion dollars are going to be awarded in the fiscal year 27? Absolutely. So, you know, and you know, frankly we were we were we were looking at some of those to be awarded towards the end of 2027.

Speaker #5: So thanks for the follow-up.

Speaker #3: That concludes our Q&A session. I will now turn the conference back over to John Mengucci for closing remarks.

Speaker #5: Thanks, Jeannie. And thank you for your help on today's call. We really want to thank everyone who dialed in or listened to the webcast.

John Mengucci: What's just as exciting is the fact that future recompetes that would have come up in Q1 or so of 2027, they've already been extended by 18 to 24 months, which is really a great way to win an ECP, just to never have to bid on them. You only get there when customers recognize the areas that we're in, the importance to national security of the areas that we're in, and the level of performance we've had. Thanks for the follow-up.

Speaker #5: For their participation, we know that many of you have follow-up questions. And Jeff McLaughlin and George Price and Jim Sullivan are available after today's call.

But, you know, we clearly we're not, we're not there but we'll be able to report on how 26 were wrapped up and how they go forward within 2027, uh, on there. It can be front. Uh, this was a this this year 2026 is, is been a really large year for us. Um, you know, as I think Jeff mentioned, during his prepared remarks, we're we're already greater than 90% on their ecomp front and what's just as exciting is the fact that

Speaker #5: So please stay healthy. And all my best to you and your families. This concludes our call. Thank you and have a fantastic day.

Future to recompete, that would have come up in the first quarter. So 27, you're already been extended by 18 to 20 24 months, which is really a, you know, a great way to win an econ piece, right? Just to never have to uh, bid on them. You only get there when when customers recognize, uh, the areas that were in the importance of National Security of the areas that we're in, and the level of performance we've had. So, uh, thanks for the following.

Operator: That concludes our Q&A session. I will now turn the conference back over to John Mengucci for closing remarks.

John Mengucci: Thanks, Jeannie, and thank you for your help on today's call. We really want to thank everyone who dialed in or listened to the webcast for their participation. We know that many of you will have follow-up questions, and Jeff MacLauchlan, George Price, and Jim Sullivan are available after today's call. Please stay healthy, and all my best to you and your families. This concludes our call. Thank you and have a fantastic day.

That concludes our Q&A session. I will now turn the conference back over to John mingoy for closing remarks.

Thanks Jeanne. And thank you for your help on today's call. Uh, we really want to thank everyone who dialed in or listened to the webcast.

For their participation. We know that many of you have follow-up questions and talk to glocken and George price. And Jim Sullivan are available after today's call. So please stay healthy and all my best to you and your families. This concludes our call. Thank you, and have a fantastic day.

Operator: This concludes today's conference call. Thank you all for joining. You may now disconnect.

This concludes today's conference call. Thank you all for joining. You may now disconnect.

Q3 2026 CACI International Inc Earnings Call

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