CACI Reports Results for Its Fiscal 2027 First Quarter

CACI’s fiscal Q1 2027 revenue rose 8.2% year over year to $2.475B, while adjusted diluted EPS increased 11.8% to $7.66 and EBITDA grew 22.4% to $328.8M. The company raised FY2027 revenue guidance to $10.7B–$10.9B, adjusted net income to $740M–$760M, and adjusted EPS to $33.18–$34.08; it reaffirmed free-cash-flow guidance of at least $900M. Contract awards totaled $4.8B, funded backlog rose 14.8% year over year to $6.2B, while quarterly free cash flow fell 6.6% to $133.5M.

Analysis

Signal quality: The beat is better on operating leverage than on underlying demand. Revenue grew 8.2%, but organic growth was only 2.1%; meanwhile EBITDA rose 22.4% and its margin expanded to 13.3%. The gap warrants scrutiny: it may reflect mix and execution, but the release does not isolate the drivers. Technology revenue outpaced expertise, supporting a higher-quality growth narrative, while the sharp increase in fixed-price mix makes delivery and labor-cost execution more consequential.

Backlog is not yet a clean reacceleration signal. The 2.0x book-to-bill and higher funded backlog improve near-term visibility, but total backlog was essentially flat year over year and awards were down 3.4%. Large ceilings are not equivalent to funded work or revenue; validate conversion and funding on the call. Higher Department of War exposure is a relative tailwind if defense priorities hold, but concentrates budget and appropriations risk. Leidos, Booz Allen Hamilton, and SAIC are relevant competitors for labor, recompetes, and technology-led federal work; stronger awards can intensify cleared-talent competition across the group.

Near-term: the outlook increase is modest, and tomorrow’s call is the catalyst for clarifying organic growth, award funding, and fixed-price execution. 1–3 months: funded-backlog conversion and working-capital normalization matter more than headline contract ceilings. 6–18 months: a sustained shift toward technology and margin expansion could support a better quality multiple, but rising interest expense and acquisition-related amortization complicate GAAP earnings comparisons. FCF fell year over year, DSO lengthened, and the full-year FCF floor was unchanged—so earnings momentum has not yet translated into better cash conversion.

Key Decisions for Investors

• Keep CACI on a positive watch, but avoid chasing the release before the October 22 call; seek confirmation that organic growth is improving and that the guidance increase is supported by funded work rather than contract ceilings.
• If the call confirms funded-award conversion and explains the organic-growth gap without weakening margin expectations, consider a staged long CACI position. No price target is warranted without valuation and post-release price context; invalidate on a guidance cut, deteriorating fixed-price execution, or persistent weak cash conversion.
• Monitor quarterly funded backlog, total backlog, DSO, and FCF against the unchanged $900 million floor. If funded backlog growth fails to convert to revenue or DSO continues rising, reduce exposure even if book-to-bill remains strong.
• Treat the earnings-quality gap as the principal risk: adjusted EPS growth materially exceeds GAAP EPS growth, while interest expense rose sharply. Reassess if interest costs continue to outpace operating-income growth or if margin expansion reverses.