For CACI, a balance of caution and optimism
By Marjorie Censer,
Officials at Arlington-based CACI International have been some of the most optimistic, even as other contractors started reporting sinking revenues, late contract awards and postponed opportunities.
But the contractor’s top executives have changed their tone.
“We are beginning to feel the impact of the budgetary pressures affecting our clients,” said Paul M. Cofoni, CACI’s president and chief executive, in a call with investors earlier this month.
Looking to fiscal 2013, which begins this summer, he said CACI does “not expect to realize the growth rates we have experienced in recent years, due to continued challenges related to uncertainty in the government budget process, delays in government procurement activities and the drawdown in Southwest Asia.”
The subdued forecast is a far cry from the bullish takes of previous calls. In an interview last week, Cofoni said the increased uncertainty “surprised us when it came, because we had been sort of the exception to the rule.”
“The things you were hearing our peers talk about a year ago, we’re starting to see ourselves,” he said.
CACI’s more cautious outlook suggests that slowdowns in federal spending are hitting contractors across the board, said William Loomis, managing director at Stifel Nicolaus, which has a business relationship with CACI.
At CACI, “it just happened a little sooner than I thought and sooner than the company thought,” he said. “It’s impacting every company in different ways and at different times ... but it is impacting everyone.”
Still, CACI posted strong results in its most recent quarter. The company reported profit of $40.9 million ($1.45 a share), up about 12 percent from $36.4 million ($1.16) in the same three-month period a year earlier. Revenue grew 1.6 percent to nearly $928 million.
In the call with investors, Daniel D. Allen, president of U.S. operations, said CACI had anticipated that the federal budget’s passage last year would free up agencies to award contracts.
“Unfortunately, the ambiguity [and] uncertainty in the 2013 budget caused them to take pause,” he said. “As you look through most of next fiscal year, the budget uncertainty, the elections and how that translates into stability that our clients can make decisions, we think they will be somewhat guarded in how they do that.”
CACI is not alone. Fairfax-based ManTech International, for instance, reduced its forecast — from $131 million in profit to $113 million — for fiscal 2012 when reporting its earnings earlier this month.
“With lower than anticipated award activity and decreases in scope on overseas intelligence, surveillance, and reconnaissance mission support, we now expect more modest growth across the enterprise in the immediate term,” said Kevin M. Phillips, ManTech’s chief financial officer, in the announcement.
Still, Cofoni said in an interview CACI would benefit from its resilience thus far.
“We have performed for the last several years ahead of the peer group,” he said, and “my expectation is also that we will emerge faster from this period than our peers.”
Cofoni added that CACI is looking to improve its capabilities in some anticipated growth areas, including cybersecurity, mobility and health care information technology.