CACI International Q2 Earnings Call Highlights
by Amy Steele · The Cerbat GemCACI International (NYSE:CACI) executives used the company’s fiscal second-quarter 2026 earnings call to highlight stronger-than-expected profitability and cash generation despite what management described as lingering disruption from a lengthy government shutdown. The company also raised its full-year fiscal 2026 guidance across revenue, EBITDA margin, earnings, and free cash flow, citing stronger first-half performance and improved visibility.
Second-quarter results: revenue growth, higher margins, and $138 million of free cash flow
President and CEO John Mengucci said the quarter’s results reflected CACI’s strategy of investing ahead of customer needs and increasing the technology content of its business. The company reported second-quarter free cash flow of $138 million, which Mengucci said was driven by 6% revenue growth and an 11.8% EBITDA margin.
Chief Financial Officer Jeff MacLauchlan provided additional detail, reporting revenue of $2.2 billion, up 5.7% year over year, including 4.5% organic growth. MacLauchlan said the shutdown affected program timing and delayed some government material purchases in the quarter, but he emphasized that margins and cash flow held up well.
Adjusted diluted earnings per share were $6.81, up 14% from a year earlier. MacLauchlan said higher operating income and a lower share count more than offset higher interest expense and a higher income tax provision. Days sales outstanding were 57 days.
Awards, backlog, and pipeline: shutdown slowed awards, but visibility remains
CACI won $1.4 billion of awards in the quarter, equating to a 0.65x book-to-bill ratio. Mengucci noted book-to-bill was 1.4x for the first half and 1.3x on a trailing 12-month basis. MacLauchlan said the trailing 12-month figure reflected “good performance in the marketplace” even as award decisions rebounded slowly after the protracted shutdown.
Backlog totaled $33 billion, up 3% year over year, while funded backlog rose 7%. The weighted average duration of awards in the quarter was over six years.
MacLauchlan also outlined the company’s near-term revenue composition expectations for fiscal 2026:
- 95% of revenue expected from existing programs
- 3% expected from recompetes
- 2% expected from new business
On the pipeline, he said CACI had $6 billion of bids under evaluation, with over 70% tied to new business. The company expects to submit another $20 billion in bids over the next two quarters, again with over 70% in new business.
In response to a question about pipeline cadence, management said the shutdown’s length and its timing around the holidays left acquisition processes “behind the curve,” but they see activity “filling back up,” which is reflected in planned bid submissions over the next 180 days.
Raising fiscal 2026 guidance; management emphasizes free cash flow per share
Management raised fiscal 2026 guidance across all metrics. Mengucci said the company now expects:
- Free cash flow of at least $725 million
- Revenue growth of nearly 8%-10%
- EBITDA margin of 11.7%-11.8%
MacLauchlan specified the new revenue range as $9.3 billion to $9.5 billion, representing 7.8%-10.1% total growth, including “slightly less than two points” from acquisitions. He raised adjusted net income guidance to $630 million to $645 million, translating to adjusted EPS of $28.25 to $28.92. He said the EPS outlook implies 7%-9% growth despite last year’s “unusually low tax rate.”
MacLauchlan added that for the third quarter, management is “comfortable with the current consensus estimate” for revenue, and expects second-half EBITDA margin to be consistent with the first half.
Both Mengucci and MacLauchlan emphasized that the updated guidance does not include any benefit from the planned acquisition of ARKA. Mengucci also said the company expects to exceed its $1.6 billion three-year free cash flow target even after normalizing for benefits tied to changes in R&D capitalization from what he referred to as the “one big beautiful bill.”
Technology focus: electronic warfare and enterprise modernization
Mengucci said CACI’s technology portfolio has grown to nearly 60% of total revenue, with management expecting technology to increase further over time and support margin expansion. He highlighted electronic warfare (EW) as a key differentiator, saying it represents about $2 billion in revenue.
Mengucci described CACI’s EW approach as “software-defined,” enabling rapid adaptation as threats change and allowing alternative acquisition models such as OTAs. He cited Merlin and RMT as examples of proactive investments, noting a Merlin demonstration unit was deployed to the southern border and that customers placed the first production order for RMT.
On the enterprise technology side, Mengucci pointed to modernization priorities, citing the company’s claim that it has won the “three largest agile software development programs in the federal government.” As an example, he discussed Customs and Border Protection work, stating CACI delivered nearly a 200% increase in software releases over five years, like-for-like cost reduction, and high software quality. He also said the company is bringing AI-based object tracking technology—initially developed for the intelligence community—to CBP.
Contract developments, policy themes, and the pending ARKA acquisition
During Q&A, Mengucci confirmed the JTMS protest was denied and said CACI is beginning to ramp the program. He described it as a 10-year, $1.6 billion task-order-based award that could contribute to fourth-quarter revenue, while providing more meaningful growth in fiscal 2027 and 2028. Mengucci said the program will use an off-the-shelf software platform, including SAP and SaaS-based solutions, and will leverage CACI’s agile software development processes to consolidate disparate legacy systems. He also said the company has “a couple of other protests” expected to resolve by the end of the month.
Management also discussed reconciliation funding, with Mengucci saying CACI is seeing positive impacts in border security, counter-UAS, modernization of Space Force infrastructure, and certain financial and logistics systems modernization initiatives. He also referenced added funding for intelligence programs related to “left of launch” capabilities in the context of “Golden Dome,” stating the company included a “range of outcomes” in its updated guidance.
On acquisition reform and a push toward more commercial-style contracting, Mengucci said CACI was intentionally built to operate across both FAR Part 12 and FAR Part 15 environments. MacLauchlan added that OTA contracting has accelerated, with CACI seeing 2.5 times the level of OTA contracting in the past two years compared with the prior five years.
Regarding ARKA, management said it plans to discuss more financial details after closing. MacLauchlan said leverage ended the quarter at 2.4x net debt to trailing 12-month EBITDA, intentionally below the company’s target range in anticipation of ARKA. He reiterated prior expectations that leverage would rise to 4.3x upon closing and said the company expects to return to “the low threes” within six quarters after closing based on cash flow characteristics of the combined business.
Finally, MacLauchlan attributed margin strength to a favorable mix toward technology and continued discipline in controlling indirect costs, saying the company is in its “fourth year” of reducing indirect costs as a percentage of revenue while in a growth mode.
About CACI International (NYSE:CACI)
CACI International Inc is a leading provider of information solutions and services to the U.S. federal government, with a primary focus on defense, intelligence, homeland security and federal civilian agencies. The company delivers advanced technology and domain expertise to support mission-critical operations, offering capabilities in areas such as data analytics, cyber security, network integration, enterprise IT modernization and logistics support. By integrating software, hardware and professional services, CACI helps clients enhance situational awareness, improve decision making and maintain critical infrastructure resilience.
Founded in 1962 and headquartered in Arlington, Virginia, CACI has evolved from a small consulting operation into a global enterprise.