© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. Welcome to the CACI International Fiscal 2024 Third Quarter Conference Call. Today's call is being recorded. [Operator Instructions]
At this time, I would like to turn the conference call over to George Price, Senior Vice President, Investor Relations. Please go ahead.
Thanks, Dennis, and good morning, everyone. I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning.
We are providing presentation slides, so let's move to Slide 2. There will be statements in this call that do not address historical facts, 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. 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.
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. Let's turn to Slide 3, please. To open our discussion this morning, here is John Mengucci, President and Chief Executive Officer of CACI International. John?
Thanks, George, and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year '24 results. With me this morning is Jeffrey MacLauchlan, our Chief Financial Officer.
Move to Slide 4, please. CACI delivered outstanding third quarter results across the board. We grew revenue by 11%, with contributions from both expertise and technology programs.
EBITDA margin of 11.3% showed significant expansion from last year, consistent with our expectations of stronger margins in the second half. And we delivered healthy free cash flow of $102 million.
In addition, our third quarter award of $3.5 billion represents a 1.8x book-to-bill for the quarter and on a trailing 12 months book-to-bill to 1.5x. About half of our awards were for new work to CACI, and we continue to demonstrate excellent performance on our recompetes as well.
Our third quarter results are well aligned with our value creation model, which focuses on long-term growth and free cash flow per share. As a result of our strong performance, we are again raising our full year guidance.
Slide 5, please. Let me provide a few thoughts on the macro environment. Recent passage of the government fiscal year '24 budget and supplemental is a positive development and removes an element of uncertainty for our customers. Budget levels and growth are very consistent with what was laid out last year by the debt-ceiling agreement, and the supplemental could provide funding that would support additional growth of our Counter-UAS technology.
The proposed GFY '25 budget is also in line with expectations. And like most years, we expect it will begin with a continuing resolution, which typically does not have a material impact on our business. One thing remains clear, National Security and IT modernization remain key focus areas for our government. As we've said many times before, the world is a dangerous place. And we continue to see clear demand signals driven by world events. CACI continues to be strategically positioned in enduring and well-funded areas that align with our nation's most important priorities.
Slide 6, please. A number of years ago, we undertook a strategy to become a more focused, differentiated and resilient company. It was even better positioned to drive long-term growth and shareholder value. This strategy has 5 key elements: focus on key enduring priorities for national security and IT modernization; leverage software to rapidly address critical needs; bid less, win more, and prioritize larger longer-duration opportunities; invest ahead of need to develop differentiated capabilities; and deploy capital in a flexible and opportunistic manner. All of these elements are focused on driving long-term growth, particularly in free cash flow per share, which we believe is the ultimate metric for long-term shareholder value creation.
Slide 7, please. Today, you can see the successful execution of our strategy manifest in several ways. First, we are well positioned in key national security and IT modernization priorities of the federal government with agile software development methodologies and software-based technologies. On the national security front, our capabilities in the electromagnetic spectrum are differentiated and in high demand. Every day, world events are demonstrating the increasing importance of signals collection, intelligence, geolocation and electronic attack. Software enables us not only to provide these capabilities to our customers but also to adapt and update these capabilities, which speed in agility as adversaries change their tactics.
On our U.S. Navy Spectral program, we are working with our customers to modify and enhance what will be delivered and when, made possible by our open architecture and software approach, which allows for contemplated changes and requirements. And we are beginning discussions with the Navy in an effort to consider reusing elements of Spectral as a baseline for other systems because that's one way to provide fleet-wide capability upgrades, when and wherever required to keep pace with rapidly changing adversaries and technologies.
In addition, we are building out our ability to deliver our technology to FVEY countries, to NATO countries and other allies. We have already made deliveries to several of these countries. In fact, during the quarter, we received our first order from the Canadian government for our software-defined, man-portable Counter-UAS technology, called BEAM.
We are also providing our software-defined SIGINT technology, [indiscernible] UAVs to assist in signal collection missions. On the IT modernization front, last quarter, we discussed how our capabilities are addressing increasing demand for network monetization. In addition, we are also winning and delivering on other IT modernization requirements. For example, this quarter, we won our recompete of IT work supporting both EUCOM and AFRICOM, enabling our customers' missions and they respond to an ever-increasing list of critical world events. IT modernization using our Agile software development and DevSecOps capabilities also recently held the U.S. Marine Corps to achieve the first ever clean financial audit for a branch of the military. This highly visible achievement as to our strong record of past performance and enhances our ability to pursue additional modernization opportunities across the U.S. government.
Slide 8, please. As I said, we're continuing to enhance the long-term visibility of CACI's business through disciplined bidding and larger, longer duration opportunities. As I mentioned, we had yet another fantastic quarter for awards, and I'm very pleased with our business development organization's performance. Our $3.5 billion of awards in the quarter had a healthy mix of recompetes. And in several cases, we were able to expand those contracts.
On the IT work I mentioned earlier, this supports both EUCOM and AFRICOM. We not only won our recompete, we nearly doubled the size of that contract to well over $1 billion. Successes like this drove our third quarter backlog to a record $28.6 billion, representing nearly 4 years of annualized revenue. The weighted average duration of awards that we booked into backlog remains well above 5 years on a year-to-date basis. We continue to have a robust pipeline of new opportunities that allows us to be discriminating in the work we pursue. These wins and the delivery duration metrics provide visibility not only to support current year growth but for future year growth as well.
Slide 9, please. Finally, we continue to invest ahead of need and deploy capital in a flexible and opportunistic manner. I previously mentioned our Agile software development and software-defined capabilities in the electromagnetic spectrum. Two examples that illustrate investing ahead of need, as well as our organic investments in our Photonics business, to name just a few.
You also may have seen we've made a few smaller acquisitions this year, both in the U.K. and here in the U.S. as our M&A pipeline continues to expand. During the third quarter, we closed the acquisition of Quadrint, a provider of digital application modernization, primarily for the intelligence community. Quadrint brings specific customer relationships and past performance in the IC that are additive to our business. Consistent with our M&A strategy and the acquisition is accretive in year 1.
Slide 10, please. Overall, I am very pleased with our strong performance. We are seeing accelerating growth as the larger awards we've won over the past few years continue to ramp. And we see on contract growth in our existing portfolio. As a result, we are raising our full year guidance, and Jeff will share the details with you shortly.
In summary, we continue to successfully execute our strategy. Our investments ahead of need, differentiated capabilities, strong execution and exceptional business development positions CACI to drive top line growth, strong margins and increasing free cash flow per share.
With that, I'll turn the call over to Jeff.
Thank you, John, and good morning, everyone. Please turn to Slide 11. In the third quarter, we generated record revenue of over $1.9 billion, representing 11.1% growth, of which 10.2% was organic. The balance was generated by the 3 acquisitions we've made over the past 12 months. Third quarter EBITDA margin of 11.3%, represents a sequential increase of 200 basis points, which is in line with our expectations and what we have communicated to you throughout the year. Adjusted diluted earnings per share of $5.74 were 17% higher than a year ago. Greater operating income, along with a lower share count more than offset a higher income tax provision and higher interest expense.
Third quarter operating cash flow, excluding our accounts receivable, purchase facility was $114 million, reflecting strong profitability and cash collections. We reported day sales outstanding DSO of 50 days, as we continue to efficiently manage working capital. Free cash flow of $102 million for the quarter represents good sequential and year-over-year increases. Slide 12, please. The healthy long-term cash flow characteristics of our business are modest leverage of 2x net debt to trailing 12 months EBITDA and our access to capital provides us with significant optionality.
As John mentioned, we made an acquisition in the third quarter, and we remain well positioned to deploy capital in a flexible and opportunistic manner to drive long-term growth in free cash flow per share and shareholder value.
Slide 13, please. We're pleased to, again, raise our fiscal '24 guidance as a result of our strong business performance. We're raising our revenue guidance to between $7.5 billion and $7.6 billion. This represents growth of 11.9% to 13.4% for the year, with the organic component being 11.3% to 12.8%.
We are also affirming our underlying EBITDA margin expectations in the high 10% range where we now expect to be about 10.7% for FY '24. Recall that this margin guidance excludes the previously discussed $200 million of material sales in the first half of the year, which equates to approximately 30 basis points of impact to the full year margin.
As a result of our stronger revenue outlook, we're narrowing and increasing our FY '24 adjusted net income guidance accordingly to be between $455 million of $465 million, with an [ attentive ] increase in adjusted earnings per share to between $20.13 and $20.58 per share.
And finally, we're maintaining our free cash flow guidance of at least $420 million. You will recall this assumes receipt of a $40 million tax refund related to prior year tax method changes. The IRS has accepted our treatment of the method change, the timing of the payment is entirely up to the IRS.
In addition, our free cash flow outlook now assumes about $80 million in capital expenditures, down slightly from our prior expectation as we're able to realize efficiencies in our capital spending. This is largely offset by slightly higher working capital usage from the higher revenue we expect through the end of the fiscal year.
Please note that additional details of our updated guidance have been included in our presentation to assist you with your modeling.
Slide 14, please. Turning to our forward indicators, our prospects continue to be strong. Our trailing 12 months book-to-bill ratio of 1.5x reflects strong performance in the market place. Our record backlog of $29 billion, increased over 13% from a year ago and represents just under 4 years of annual revenue. These metrics provide good long-term visibility into the strength of our business.
For fiscal year '24, we now expect approximately 98% of our revenue to come from existing programs, with approximately 1% each from recompetes and new business. Progress on these metrics reflects our successful business development and operational performance and yields increased confidence in our expectations for the year.
In terms of our pipeline, we have $11 billion of bids under evaluation, over 70% of which are for new business to CACI. We expect to submit another $15 billion in bids over the next 2 quarters with 90% of that for new business. Our ability to increase both of these metrics from last quarter, even while delivering a 1.8x book-to-bill ratio reflects the healthy demand, successful strategic positioning, differentiated capabilities and disciplined bidding we have discussed.
In summary, we delivered outstanding third quarter results. We continue to see good momentum in our business, and as a result, are raising our full year guidance for the third time this year. We are winning and executing high-value enduring work that supports long-term growth, increased free cash flow per share and additional shareholder value.
And with that, I'll turn the call back over to John.
Thank you, Jeff. Let's go to Slide 15, please. In closing, I'm very pleased with our strong third quarter performance and our ability to again raise full year revenue and earnings guidance. At the start of this fiscal year and over the past several quarters, we have outlined our expectations of how and why our financial results would progress through the year. We discussed the fact that many of our larger technology awards would take time to ramp and the timing of investments and deliveries would drive higher margins in the second half versus the first half. The stronger growth and increased profitability we've reported are entirely consistent with those expectations. We continue to successfully execute our strategy. It is a thoughtful and intentional strategy of focusing on current key enduring priorities, investing ahead of need, developing differentiated capabilities and then deploying capital in a flexible and opportunistic manner. And it is a strategy that is driving higher visibility, long-term growth, increasing free cash flow per share and shareholder value.
As is always the case, CACI's success is driven by our employees' talent, innovative spirit and commitment to customers' missions and to each other. I'm immensely proud to lead such a capable and dedicated group of people. To everyone on the CACI team, thank you for what you do each and every day for our company and our nation. And to our shareholders, I want to thank you for your continued support of CACI.
With that, Dennis, let's open the call for questions.
[Operator Instructions] Your first question is from the line of Robert Spingarn with Melius Research.
Very nice quarter, John and Jeff. And Jeff, I've got a question for you and then a follow-up for John.
For Jeff, these margins in the quarter were quite strong and the implied margin for the fourth quarter as well. And while I know you aren't yet ready to talk about fiscal '25, for our modeling perspective, should we think of this underlying 10.7% margin has a good jumping off point? Or should we be thinking about something in the low 11% range like you did in the third fiscal quarter?
Well, you're right. We're not ready to talk about '25. I think it's really probably more prudent to think about the year as a whole. We talk about the fact that we manage and guide to the year, the profile this year was such that we thought it was meaningful enough to give you some kind of first half, second half insight, but we really manage the business on an annual basis and I would encourage you to think about it that way.
Let me try with this then, Jeff. At the very least, in the fixed price portion of your business, which I think is around 30%. I don't know if the backlog is at 30% as well. But does the roll off of any stale pricing in that fixed price business at least give you some natural lift? And then John, I have one for you.
Well, I think the premise of your question might be a little off. I don't think you can necessarily equate fixed price with high margins and cost type with low margins. We've talked before about the fact that we have some very good margins on some very high value-added item cost type work. So I think you ought to -- I'm going to go back to what I said a few minutes ago, I would encourage you to think about the business kind of in total.
What I was going to say -- I'm sorry, John, go ahead.
Go ahead, Rob.
Jeff, what I was getting at was inflation. And so not so much whether margin and cost plus are higher or lower than fixed price, but just that the fixed price for a lot of companies in the backlog was priced pre-inflation. And as that rolls off, you can reprice at better rates. And does that provide some natural lift?
Yes, I see. Inflation is not really a major factor for us. A lot, particularly on the fixed price work, a great deal of it is kind of quicker turn task orders. And we really maintain fairly current view of our cost structure as we're pricing those. So that's not really a big driver for us as it may be for others.
Yes, Rob, on our software-based technology deliveries, a lot of those come in and go out in the same quarter, right? So we're constantly repricing some of that software-based tech. So we're always keeping up with things like supply chain issues, right? When we were spending a lot of time talking about that as well as any type of inflationary costs, but we're always able to reprice those items and that part of our portfolio. Our larger technology programs that are fixed price, even over a 3- to 5-year range, labor, we're very -- we're probably industry-leading at making sure we can get talent with the right skills at the right price and being able to manage that and also bring in efficiency. So on those longer-term technology builds, we're constantly bringing in efficiencies and those were software based, right? We're able to look for better and faster and cheaper ways to develop software, which then allow us to deliver the planned margins.
Okay. And then, John, just real quickly, the one I had for you, you did 2 acquisitions, 1 was in the U.K. You've had a presence in the U.K. all along. But are you looking to increase your international exposure? Or was that just strictly a technology-driven acquisition?
Strictly a technology-driven. I will tell you that, as I alluded to in my opening comments on our software-based technology side, we are looking at building ourselves out more broadly in the international front. We're probably in the second or third inning there. Really looking at most NATO countries or FVEY countries you already delivered to today. Canada was the one that we added to that list. So we're going to continue to expand our reach of our software-based technology into the international market.
One, it allows us to drive our addressable market for those -- for that technology. And then second, it is where the largest threat is, and well, I'm sure we'll talk more about that during the rest of the call. So Rob, thanks for your questions.
Your next question is from the line of Bert Subin with Stifel.
Jeff, John, so maybe just sticking with the margin theme. You saw a nice step-up going from just from the first half to the third quarter. And I think part of that was investment related. Can you just walk us through what specific Photonics-related investments moderated in the quarter to help push margins higher? And what's your general view on the lumpiness of margins on a go-forward basis? Do you think the cadence throughout the year will start looking flatter? Or would you expect variability to remain on the back of tech sales timing?
Yes. We've talked about this Photonics investments in the past. We have several programs where we're sort of transitioning into more robust volume. And some of the investments associated with that have come to an end, as we've talked about the last couple of quarters.
I think we will always have some variability in orders based on our commitments to invest ahead of need. Those are always going to be prioritized and they'll lead to some lumpiness on expected margin.
John, do you want to add to that?
Yes, sure. Bert, look, on our software technology sales, right, of which Photonics is a part of all of our Counter-UAS systems, all of our SIGINT collection systems, everything that we do in the EW, electromagnetic Spectrum area. As I started off with one of Rob's questions, those are -- those have a highly variable sales cycle, right? Most are not really being driven by long-term backlog. They are -- they are sort of book and turn work. So I believe we will, for a long time, look at ups and downs on quarterly margins, which is why we're really focused on the full year margin.
So why is that? It is that way because we are the company in a sector that actually does deliver technology. And when you deliver technology, it's not the same as delivering pure expertise, where you roll out and your margins are quite predictable quarter-to-quarter. And as the volume of technology is at a 55-45 mass to expertise, it does bring some variability to quarter-to-quarter endpoint.
So we will talk a lot about that, Bert, as we present our '25 guidance, but I think it's a very important thing to recognize. So it will not be uncommon for us to talk about beat, beat, let's beat on margin because that's just how that more volatile but very positive higher-margin work comes in.
The second thing that I want to say on that is, look, margins are a really important part of our value creation model. So it actually has our intention. It's what we've been focused on. But long term, it's going to be our focus. Jeff talked about the Photonics investments that have now ramped down. We're not going to short on investments that drive future growth. And we're not going to do one natural etch to achieve a quarter-to-quarter point margin.
We love free cash flow per share because it brings in margin, it also brings in prudent value-creating capital deployment, that brings in investing ahead of need. It also brings in a longer-term view and a long-term approach to organic growth. So all of those things go into this soup. And what we would like to see come out over the long term, which is what we have experienced is more visibility on the organic growth side, and then ever increasing margins, but it's not going to be year-over-year. So hopefully, that provides some additional color.
That does. I guess just as a follow-up, if we think about some of these tech items, I mean you've had a lot of recent success on the contract front really across these. And I'm just curious if you had to rank Photonics, Counter-UAS, EW, SIGINT and Network Security, all areas that you've had recent contract success, just as growth drivers over the next couple of years, how would you do that? You don't have to specifically rank, but what's at the top of that list?
Yes, sure. Look, on the software-based technology work, that has been something we've been investing in over the years. It is a highly volatile market, which you should read as a positive rate. Folks who look to do us harm change their tactics on an hourly basis. And the only way you can keep up with those threats is to make certain that your signals in your EW, electromagnetic spectrum technology stays up with that.
We have proven that if you look at all of the issues that are out in today's press about drone strikes, all of that technology that we have fits exactly on top of those threats where drones are launched in 24, 48 hours, tactics, technology and procedures are changed and the government, our customers and NATO allies as well need technology that can quickly adapt.
Photonics for -- we're going to hit volume there as we get through '25 and into 2026. We'll always have investments there as we work on being able to work on producibility. But overall, I hate to rank one over the other, except to say Photonics will hit a more compact volume sooner. But the high volume over a number of products that we have within this company are going to continue to drive technology top line and bottom line growth.
Your next question is from the line of Jan Engelbrecht with Baird.
I just want to talk about capital deployment. I know you've done some recent deals and you've got plenty of headroom available on the current share repurchase program. So just as we think about that and obviously, the M&A pipeline is more attractive right now, but you also have a higher priority in terms of growing free cash flow per share over time.
Yes. Thanks for the question. We -- the observation you make about the M&A Pipeline and the reference to our comments is correct. There are -- we see some expanding opportunity list. Even though we did not buy-back shares in the quarter, I would remind you that since the second quarter of last year, we've repurchased 1.3 million shares. So we have bought in about 6% of our outstanding shares in the last 4 or 5 quarters. So even though we didn't buy any shares in the quarter, and we are continuing to evaluate both opportunities, we're very attentive to share repurchases.
Yes. Jan, and at a macro level, look, we're flexible on the offer and opportunistic, right? And that's going to be based on the dynamics that we see. We're going to evaluate a range of factors. We're going to look at some of the things that you mentioned. We're looking at our M&A pipeline, looking at the stock price, we're looking at valuation, leverage interest rate, many, many things.
All options are always on the table. You heard we did a few smaller acquisitions that we have completed. The only thing I'd mention is that timing of the future M&A candidates is a consideration of our capital deployment assessment as well, right? So it's not always when we're in a leverage of x, we have y number of different companies we'd like to make a future growth part of CACI. So there are a lot of moving pieces.
Bottom line, we believe that either of those capital deployment actions are going to benefit shareholders in the near and in the long term, which is why we're focused on free cash flow per share. I really appreciate the question.
Perfect. That's really helpful. And just a quick follow-up. Just at a high level, if we look at some of your more recent sort of multibillion dollar programs, can you just walk us quickly, from a top line perspective, sort of the cadence on -- maybe not each one, but if you could sort of EITaaS and NSA and the Navy program to sort of how the revenue when that peaks over the next couple of years?
Yes, sure. So look, on our larger expertise award, which is the large sizable Cyber Intel award, you all know the name, I'm not allowed to say it. Look, we've ramped ahead of plan. We've -- we will continue to ramp that at a reasonable rate as we go through '25. So look at the full ramp when we get to start off our fiscal year '26. So there is a number of items that are in our current scope that just started later after award. So I like how we ramp that one up, and really good positive feedback from our customer.
On our EITaaS, that also ramped ahead of plan. That's going to continue to ramp and grow in '25 and beyond. If you all remember, that was a BPA, total value of $5.7 billion over a 10-year period. We recognized about $2 billion of that in the first quarter of '23.
So that starts upfront planning. We're doing some design work there, picture a lower volume. The customer did ask us to take over from the small level of incumbents, take their work over sooner because they want to see that work improved. So we're able to do that as well. So customers are very, very pleased.
The last one is Spectral, right? That's a real [ gem ] technology program. We did ramp ahead of plan. Connected to my prepared remarks, we're looking at what that first delivery looks like to the fleet. I spent some time during the last week with some of the Navy seniors talking about this program extensively, that the threats are continually changing. And what a refreshing discussions -- what refreshing discussions we had, because we can talk about the threats changing, how do we make changes to this large technology program without the ACAP1 kind of follow-on, that's a 4-year delay. We're sitting there working alongside, shoulder-to-shoulder, hip-to-hip with this customer, who frankly has the -- has responsibility of protecting their surface fleet from the things that you read about in the news today.
So great work there. We would see future expansion definitely into '25 and '26. So hopefully, that provides some the color you were looking for, Jan.
Your next question is from the line of Mariana Perez Mora with Bank of America.
So my question is a follow-up on the international opportunities. And how should we think about M&A and partnerships there? I really think that [ C-UAS ] gives, particularly in the pillar 2, C-UAS. You see opportunities for electronic warfare and C2. Capabilities like how do you think about positioning there kind of like going solo, partnering with someone in the region or even doing some acquisitions in strategic areas?
You're asking for all of our secrets. All right. So here's -- let me try to unpack that. Look, on the international front, it's no secret that in electromagnetic spectrum, given everything that we're seeing today, it's a very dangerous world and everyone needs electronic warfare equipment.
Many allies around the globe are talking about expanding their budgets. We, as I mentioned earlier, currently delivered technology to a number of FVEY countries. As we "expand", go deeper into the FVEY and into NATO, Eastern Europe is going to be one of our absolute focus spots. We have made a number of trips with our software-based technology sales team, Poland, [indiscernible], Lithuania, Romania and the like. And we had 2 of our folks spend about 10 days in the Ukraine, buckled down in Kyiv, frankly, talking to on-the-ground commanders about what they're seeing and what they need as we go forward. And it really related to the supplemental comment I made during my prepared remarks that we can have all the meetings we like, but the supplemental helps.
In addition, a lot of those Eastern European companies are spending their own defense [ routes ], including in the Ukraine to look for faster paced solutions to what they're seeing.
You asked about M&A, I don't, today, see us doing international-based M&A. That's a tough one for us. There's a lot of different skill sets that we, today, and our company don't have, but we're able to reach all of those customer needs with international sales reps and our own sales team.
I would mention, when we did the AVT acquisition, you mentioned [ C-UAS ]. We have a small branch of what was AVT in Australia. It does allow us to qualify in a different manner to go after Australian programs because we have indigenous capabilities within the country. So a lot of avenues there. A lot of decisions we're still in the middle of making Mariana. But there and in other areas, we're going to continue to drive growth. We're going to drive all 4 of our sales channels for all those products, 2 current programs of records, direct sales and then in our international. So excited by that as we talk about '25. And as we go forward, we'll continue to be very transparent and share what we're going to do there.
And sorry if I'm oversimplifying this, but like is it fair to think that you will kind of like target the international budgets and like the growth in international budgets mostly with your technologies portfolio versus expertise?
Yes. We will address the international market with our technology portfolio. Now at the same time, expertise and forms tech. So a lot of the information we get about what other countries are doing. If you look at our expertise who focuses on soft support, on folks out in the field on the long side of the wire in a lot of these really dangerous countries, we do get a lot of expertise information that then tells us who we should go and target, where and what are order. And that is the beauty and the strength of delivering expertise and tech and all those 2 parts of our business supporting each other.
Your next question is from the line of Matt Akers with Wells Fargo.
I guess, John, how should we think about kind of the long-term growth rate for this business? I think back when you guys did the Investor Day, the quadrants that you gave, you kind of laying out like a 4%, 5% kind of margin growth, I think you're doing more like double digits this year. It sounds like there's a lot still to come. So I was just curious if that's accelerated a little bit?
Yes. Look, we are at the point where we're a reliable mid-single-digit growth company over the long term, right? We're still in the '25 and future year build-out. So I don't want to show too much because, frankly, that will end up kind of changing. But at a macro level, look, we're a solid better than mid-single-digit growth company going forward. And it really does harken back to how closely we watch free cash flow per share, right? We all talked about margins for a very long time, which is the right thing for us to be talking about because it takes an enormous amount of top line growth to drive free cash flow per share when our EBITDA margins were sub 8, okay?
We are excited that we're actually talking about high 10s, and 10, 7, 10, 8, 10, 9, all come to high 10s. So at a macro level, how we're driving the ship, which is long term, we're extremely excited and also encouraged from where we were. Frankly, Matt at that 2019 Investor Day.
What's -- what we're focused on, as you look at future investments and future growth, it's going to be near peer and the counterterrorism mission. You've heard me say so many times, folks. This was always going to be an end case even though we tried to will it into an or case, it is an end. We're going to focus on network modernization. We talked about that in the very early, early days after that 2019 meeting. We talked about the importance of electromagnetic spectrum, SIGINT, EW, Counter-UAS.
Turn that page 5 years later, everything, it's a signal -- a signal.
Near peer threats are going to drive urgency for increased speed and flexibility -- Spectral. We're a leading Counter-UAS provider out there today and the threats are in their infancy stage. I'm not trying to sell fear, but fear is out there because it is a dangerous world, and that's what we all see.
And then space, right? We talked a lot about on the Photonics side. We started to build backlog. We're the first to launch, first to interface, first to connect, and the U.S. supplier that does design and production fully in the U.S. So as we look at how we go forward, there's plenty of room for us to grow a really nice addressable market for us. And so if you take a look at where we started, mid-single-digit top line growth company focused on margins, ultimately focused on free cash flow per share.
Great. That's helpful. And I guess one for Jeff. Just the CapEx guide for the year, $80 million, I think, implies a pretty big lump in Q4. Just curious what's going through there?
Yes. There are a couple of things in there, Matt. I would say that the preponderance of it is related to some more efficient facility strategies and some footprint consolidation and management of our kind of physical infrastructure. It's not at all related to program or growth-specific kind of projects.
Your next question is from the line of Tobey Sommer with Truist Securities.
This is Jasper Bibb on for Tobey. Really nice growth in the Civil business this quarter. Last few quarters, I think better than -- I guess, flat to down with the transition in the background screening contract to DCSA. So just curious, I guess, what's driven the acceleration in Civil, now that it seems like the comps from that contract have rolled off?
Yes, sure. Yes. Go ahead. You're talking about DoD versus Fed, Civ and sort of how those parts move. Some of it is, if you all remember, a number of quarters back, the government -- we reclassified our background investigation work, our DCSA program, that was a Fed, Civ program and that transition to DoD. So that was the majority of why you're seeing some of these deltas.
Some of our longer, older recompete losses, even though that doesn't happen very often, but [indiscernible] TSA impact ramped down in the second half of '23 to anniversaries fourth quarter '24. So things like that, there isn't any one item or a difference in our strategy as to how we're bidding. So hopefully, that provides some of the color you were looking for.
Yes. No, that's helpful. And then you mentioned the new business pursuit targets. So curious if there's been any change in how you manage bid and proposal activity recently, including potentially going after more international work? And then also what does fiscal '25 look like from a recompete risk perspective?
Yes. Let me take a step up on that one. Look, how we're focused in our business development [ amortization ] where we spend the BNP and the like, it really starts at a different level. It starts with the fact that we have a very different strategy within our sector on how to grow this company. We are focused on investing ahead of customer needs, developing differentiated capabilities that then address critical enduring national security and modernization priorities.
That statement in itself says that we approach how we do business win, how we approach a new business with a very different lens, right? We're looking at first, what's going to grow the fastest? And then second, if that's where we're going to plan, that's got to be a 10- to 20-year low. That has to be a narrow deep funding stream, and I use that term many, many times. And that our strategy is technology and expertise versus just expertise. The days of trying to find just expertise work, and what is -- with the longest term will be a commodity-based delivery model. It was not the way we believe long term we could grow this business.
So that's why we built nearly from scratch a technology partners business that would be inextricably connected to the expertise side, right? So we could understand what customers need and then develop it. And then it really comes down to Bid Less and Win More, like Jasper, so giving you that comment. So how do you Bid Less and Win More? It's called focus. So there's a lot of people out there talking about retooling BD teams that we're going to go out there and went, hey, the model starts, what are you about? What are you going to focus on? How are you going to be very transparent with your shareholders? How do you find patient shareholders over the long term that are going to be looking to us to provide that reliable long-term growth? So we align with customer needs, we invest ahead of need, we shape the h*** out of things, which really means show the customer the art of the possible and really drive preference, not drive price down. And then at the end of the day, who doesn't like somebody who performs better than everybody?
So that's the mix we have. That's the recipe we have in this company. So we're not sitting here worried about, do we spend more money in Fed, Civ versus DoD. We really say, does this fit the markets that we're in and the technology and expertise strategy? When it does, we will stop at nothing to win that business for the investments, both in BNP, IRAD and in CapEx, as Jeff just mentioned, are crucial to driving our long-term growth.
On the '25 view, this year, frankly, we went through a lot of recompetes. What you don't see is, we have a lot of contract extensions. So those are customers who may have recompete it next year that came to us during the last couple of quarters and said, if you want to take another 3 years, 4 years, 2 years. So there was a lot of work that we did to gain extensions. And then, Jasper, that drives potentially a lower recompete rate as we move into '25 and '26.
Your next question is from the line of Seth Seifman with JPMorgan.
This is Rocco on for Seth. Building on the prior question, what were the drivers of CACI's impressive awards in the quarter? Did the bidding trend shift? And how is CACI thinking about bidding on future awards? Also, should we be thinking about that the strong bookings will drive another strong revenue year in fiscal year '25 above the long-term growth rate mentioned earlier? Or is there more lag in these awards?
I love the last question, trying to crowbar into 2025. But, we will certainly be overly transparent when we get to '25. But on the spirit of the first part of the question. Yes, we have had a great win. It's more about the -- more about the culture, and it's more about the strong business of our team, [indiscernible], but also the deep bench that really know how to win. This is not a 1- or 2-person driven business development machine. They are absolutely connected, both business development and sales teams, to the P&L centers. They are really looking at how do we competitively position ourselves.
The large win we had this quarter, the [ ELITE ] program, right? That was one where we spent an awful lot of time working with current customers, how do we do more for you given that the world is becoming an even more dangerous place. So that is a 2-year ago plan. And so as these programs are being run, how do we merge what we do for them? That helps unity and purpose, that helps support ability across those 2 combatant commands. So it's a very involved detailed process that is not in the hands of less than 5 people. It's in the hands of 150 people that are actually focused each and every day as to how do we shape.
And we have this mantra within this company. We're going to go into '25. Our entire FY '25 bidding lineup, most of that has already been bid in '24. The rest of that will be solutions in bid here shortly. So when we get into '25, we're talking about how do we grow '26 from a wins and award spot. That's why we've been traditionally, a long number of quarters, over 1.0, why we had a 1.8 book-to-bill, and why our trailing 12-month book-to-bill is always above 1.0.
So it is in the ethos of this company how to go drive growth, but we're going to stay true to what is we do well. We're not going to drop an anchor and some kind of work that we have no idea of doing and then chase that job based on price and promise you all, we're going to get better. We just don't operate that way. It's a long-term strategy.
Your next question is from the line of Conor Walters with Jefferies.
Congrats on the great quarter. Trying to get back to the growth you had exiting this year, you're on a really strong organic growth trajectory here in the second half in the low double-digit range. Curious if you could point to what some of the key drivers are here? I don't know if it's all from the accelerated program ramps you touched on earlier, perhaps some share gains. Anything you'd point to would be great.
John would likely want to expand on this, but it's really pretty broad-based. I mean we've talked about a couple of the major sort of franchise wins we've had over the last couple of years. Those are all ramping on or ahead of our expectation. We're really -- the portfolio broadly is kind of hitting on all cylinders, really can't point to 1 or 2 or 3 programs and say it's this or that. It's very broad-based.
Yes. I think you can look at the future programs we'll be talking about driving revenue, right? During this year, beyond EITaaS and the Large Intel expertise program, and EITaaS, we'll be talking about [ ELITE ], some of those items. So we're not a 1-program company. We're not a 3-program one, we're looking in and out to get our stride.
Now if I say that, we also have technology programs and we actually do deliver right? And when we deliver, that revenue goes away, right? And there's some sustainment. But at a company of this size, coming up on $8 billion, we are going to have programs that are going to sunset, which is a positive thing, it means we deliver everything we're supposed to deliver. And so that's why we're in the middle of building our '25 plan, right? What gives you the right range so you can assess what our most probable cases.
I'll also say, if you look back to where we were in August, folks, right? We were there where we gave you a growth rate. We also gave you a range. We said low end and high end. I invite you all to go back to what we presented to you all as the left end of the goalpost as we used to say in the right hand, 5 of the 6 things on what would allow us to drive growth, 5 of the 6 things on the high end were actually achieved. And those were some pretty high bars, but it proves, maybe not every single year, but when things align, things align, awards are lumpy, right? So we can never kind of an award coming in a specific quarter. And you all know, based on where our fiscal year is and the government's fiscal year is, there are times where we're going to win great awards that are going to come too late to have any material difference in the current year that we're in. Respect those questions, but there are times when we have to say it's going to show up in the next year.
So it's this rubric of what's exiting, what's ending. And that really drives the reason why Jeff and I always say, well I can talk about '25, it's not going to be flippant, frankly. It's just that we don't have a really good eyeball yet, and we're in the middle of stirring that soup and absolutely, when we get to August, we'll be in a really nice position to talk about '24 bottomed up, you got some great guidance earlier today and what we expect for the future.
Your next question is from the line of Louie DiPalma with William Blair.
Following up on the Spectral comments. What is the progress in terms of installations across the Navy surface fleet?
Yes. So we are in the design phase now. We've gone through a number of PDRs and CDRs using really great system engineering and software engineering terms. So we are looking at how the program moves forward.
At a macro level, we are looking for a minimally viable product, which means what's that first spiral of capabilities are going to be delivered to this 200 plus Navy surface ship fleet closer to the end of this calendar year. And then based on how that goes, we'll be looking at end of next calendar year in '25, that has to start to make deliveries to the fleet. That's a highly fluid, casual mix up. So we'll have a much better view when we get to August, but that's sort of the period we're in the development period now.
We will develop and deliver product at the end of the calendar year and some later, which is why we've been talking about that we're in the design phase now and ramp will actually start to show itself in '25, and then clearly [ N ] number of ships as we go '26 and beyond.
Great. And for that software solution, is the vision that it would last for the entire useful life of the ship in that -- a significant component is software, and you've discussed the dynamic nature of the threat. And so do you have the ability to upgrade the software in response to the changing nature of the threats such that even as requirements change, your software allows your solution to change with those requirements so that the solution can last for decades rather than I think the contract is only for 7 years, but do you envision that your software is going to last for decades and decades?
Yes, Louie. Yes. So 2 key points of that. It's an open architecture solution. Many people claim it. We actually deliver it, okay? It's open architecture because we want other companies who can decrypt different signals that they're finding with their gear to come up with what's the signature and then what is the effect to kind of apply to whatever that is, so that you can protect surface ships.
So one, based on the open architecture, yes, we have a long history. Two, the fact that we can make software changes based on the threat makes us a highly capable company as you go out into the future. We're having a lot of talks around counter-UAS at all levels of the DoD and the intelligence community. A lot of that work is based on GOTS software-based line that the government owns. We created it for them over more than a couple of decades. We start with that, and we're continually adding to that.
So to your point, as the threat changes, as we've all witnessed, when those threats change, we're able to collect the crypt, put solutions in, they can counter those within a matter of hours versus the old style was, take a surface ship into ports, tear the hardware out, put more racks of hardware in, do 6 or 7 each year, you can't maintain a fleet given where the [ threat is on ].
So we are exactly where we wanted to be, a software-based company. It is our superpower. We look to making our customers superpower as those threats continue to change.
Great. And on this same topic of drone warfare. Is CACI involved in the official JADC2 program on both the hardware and software side? In the past, you've discussed a role on several data analytics software programs with their Agile Solutions Factory and you obviously provide many different types of signals, intelligent sensors across many programs. And recently, the Department of Defense has been on Bloomberg, talking about how they have their first version of JADC2 with algorithmic warfare. Are you involved in that program? .
Yes. There are a lot of folks are involved in JADC2 as it starts to build out, and we all understand it better. I would say in the [ OV-1 ] level, yes, we're absolutely involved right. Every sensor, every shooter will have the [indiscernible] involved. But to our belief, there's a lot of building blocks that get the DoD to that and then get to the cross service model. DCGS, whether it's DCGS, Navy DCGS, Air Force, DCGS Soft, where a lot of everything we know about is put into this massively large library.
We have a formal team in Omaha that really works on DCGS Air Force. Spectral is an example, a lot of those JADC2 components, like how do you pull in from other sensors that may have seen this threat in the past, flying over surface ship X and how do we bring that signature and then exploit in quickly and provide that to the ships commander.
So yes, so we're very much connected on our technology side into all things JADC2. And in fact, the building block level today, I'm certain that as more building blocks get added, we'll be a key component of what DoD eventually delivers.
There are no further questions. I will now turn the conference back to John Mengucci for closing remarks.
Thanks, Dennis, and thank you for your help on today's call. Look, we'd like 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 James Sullivan are available after today's call. Please stay healthy and my best to you and your families. That concludes our call.
This concludes today's conference call. We thank you all for participating, and you may now disconnect.