CACI is a diverse company in terms of services offered. Primarily, it is focused on offering information, intelligence, and cyber security solutions for federal government customers and the intelligence community. More specifically, it provides intelligence analysis, operations and planning, policy, and doctrine support. Additionally, CACI designs, develops, and integrates hardware and software embedded tools and applications, as well as signals intelligence.
On the non-federal/intelligence side, the company offers business systems products and services, particularly in the areas of finance, human capital, and administrative management.
Circling back to its Q4 results, CACI posted EPS of $2.05, easily exceeding the $1.75 consensus. On a growth basis, EPS was up 16.4% (inclusive of tax reform legislation), also driven by improved program execution, as well as the 3% bump in revenue to $1.17 bln. Contract awards in Q4 were $1.5 bln, including 70% for new business.
What's particularly impressive is that back on June 20, CACI had already raised its FY18 and FY19 guidance. Specifically, it guided for FY18 EPS of $11.54-$11.74 from $11.26-$11.50, and for FY19, it guided for EPS of $8.98-$9.38 versus the $8.94 consensus. Now, this morning, CACI is lifting its FY19 guidance again, due to the aforementioned acquisition.
On that topic, the SE&A unit of CSRA is a highly-specialized provider of engineering services for the U.S Navy. In the press release, CACI stated that the company is gaining "a multi-decade legacy of support for the life-cycles of virtually every major U.S. naval shipbuilding platform. This includes program support, integrated life-cycle planning and support, systems engineering and integration, system design and development support, and test and evaluation services."
What really stands out is the purchase price relative to the total sales. CACI paid $84 mln for this business, which is expected to add about $150 mln to FY19 revenue. In other words, it paid only about 0.6x FY19 sales for the business. Given the low multiple, it doesn't come as much as a surprise then that CACI expects the acquisition to be accretive to FY19 earnings.
In fact, it raised its FY19 EPS guidance to $9.14-$9.53 from the $8.98-$9.38 range it offered back on June 20. So, from both a tactical and financial standpoint, this acquisition seems to be a very good fit for CACI -- which was already performing quite well before the buy-out.