CACI at Wells Fargo Conference: Strategic Shift to Tech Solutions

On Tuesday, 10 June 2025, CACI International Inc (NYSE:CACI) presented at the Wells Fargo Industrials & Materials Conference 2025, revealing its strategic pivot towards technology-driven solutions. The company emphasized its shift from commodity services to areas with enduring demand, such as counter-UAS and SIGINT systems. While challenges remain, CACI expressed confidence in meeting its financial targets.

Key Takeaways

• CACI is focusing on technology-driven solutions with long-term contracts.
• The company anticipates over $8.5 billion in revenue this year.
• CACI has repurchased about 15% of its shares and made 10-12 acquisitions in five years.
• Investments in AI and space domain are central to staying ahead of threats.
• The company maintains a flexible and opportunistic capital deployment strategy.

Financial Results

• Revenue is expected to surpass $8.5 billion this year, with a Total Addressable Market (TAM) of over $250 billion.
• CACI projects high single-digit growth, with margins in the low 11s for the year and the fourth quarter.
• The company has repurchased approximately 15% of its outstanding shares and made 10-12 acquisitions over the past five years.
• Current leverage stands at 2.9 times EBITDA, within the target range of 2.5 to 3 times.

Operational Updates

• CACI is repositioning to focus on differentiated services and technology solutions, bidding on fewer but larger and longer-duration contracts.
• The company’s investments target areas like counter-UAS, the electromagnetic spectrum, and SIGINT collection systems, aligning with bipartisan national security priorities.
• Recent acquisitions, such as Azure and SA Photonics, have bolstered CACI’s capabilities in optical communication and displaced major competitors in programs like Spectral.

Future Outlook

• CACI remains confident in achieving its three-year targets and anticipates benefits from the reconciliation bill, which could provide a $300 million upside.
• The company is exploring international opportunities, particularly in Eastern Europe and Ukraine, focusing on SIGINT technology solutions and the SPECTRAL program.
• In the space domain, CACI expects to significantly increase the production of optical communication terminals this year.

Q&A Highlights

• Growth is expected from areas like counter-UAS and SIGINT systems, with a shift towards outcome-focused contracts.
• CACI is leveraging AI to enhance mission outcomes, applying it both internally and for customers.
• The company emphasizes a flexible and opportunistic approach to capital allocation, maintaining an open dialogue with potential acquisition targets.

In conclusion, CACI’s strategic focus on technology-driven solutions and alignment with government priorities positions it well for future growth. For a deeper dive into the conference details, please refer to the full transcript below.

Full transcript - Wells Fargo Industrials & Materials Conference 2025:

Unidentified speaker, Analyst: Okay. Let’s get started.

Our next session is with CACI. We’ve got Jeff McLaughlin, the CFO Jason Bales, Chief Technology Officer. So gentlemen, thank you both for joining us today. I think before we kick it off, think you guys had a brief statement to start up.

Jeff McLaughlin, CFO, CACI: Yes. Just in case our general counsel is listening, you’ll all appreciate the fact that you may hear a forward looking statement or two. So I’d encourage you to look at our recent SEC filings for discussion of risk factors and related disclosures. Thanks.

Unidentified speaker, Analyst: Great. Cool. I mean, so maybe just to kick it off, I think probably a lot people are familiar with in the room, but for anyone who’s not, maybe just kind of a quick overview of the markets you guys serve, maybe a little bit of the business transformation you guys have sort of gone through over the last several years. Sure.

Jeff McLaughlin, CFO, CACI: So many of you, as I look around the room, I see more than a few familiar faces. Many of you will not be new to this story. But over the last decade or so, we have very deliberately repositioned the company in our portfolio. We entered the timeframe that I’m referring to with a great deal of expertise business, much of it not differentiated with the attendant margins. We went through a period that some of you will remember where the competitive pressures sort of drove home to us that that was not a position that we probably wanted to be in or stay in.

And it was about that time that John Mangucci, our CEO joined the company at the time as the COO and undertook a couple of changes that would have some pretty profound effects and I think have left us in a pretty strong position that we’re in today. The one was to take advantage of those privileged franchises that we had and relationships in some cases very long standing with customers and use them to leverage ourselves into positions where we could add and introduce technology to those programs and therefore differentiate ourselves and make the business a little bit stickier. It also let us embark on a strategy of bidding fewer larger jobs which generally meant that they were longer in duration. You could see them coming farther away which gave us an opportunity to build a shaping strategy around that which let us work closely with customers and invest ahead of need and get ourselves into an advantaged position so that by the time we actually had an RFP, request for proposal, we’d had a significant opportunity to have a fair amount of influence on it. And it also gave us an opportunity, as I said, to increase the technology component of the business.

As we talk about this sometimes people tend to think about the two parts of the business as being separate and they can be but they’re really not. They have been historically and remain closely related. The expertise business, which by now is even the remaining expertise business we have is quite differentiated strongly informs the technology and gives us an advantaged situation in the technology side of the business. And similarly, the ability to bring technology and in particular tools has helped us differentiate the expertise business that we have left. And then finally, as we saw some things unfold in Crimea in particular and in some other areas a decade or so ago, it became clear to us that the future of engagement was going to be defined by the ability to respond very quickly which almost had to be software centric rather than hardware.

And so the ability to kind of we call it move at the speed of the fight by using software enabled tools and technology is also part and parcel of the strategy.

Unidentified speaker, Analyst: Got it.

Jeff McLaughlin, CFO, CACI: Thank you.

Unidentified speaker, Analyst: No, it’s a helpful overview. Maybe following up on that, I mean, for those of us on the outside, expertise versus technology, sometimes it’s tough to differentiate that. I mean, do you guys draw the line and what makes

Jeff McLaughlin, CFO, CACI: Yes. The simplest way to think about it because there are people obviously on both sides of the business but the simple way to think about it and the way we characterize it is inputs versus outputs. So when the government comes to us and says, I want to have 75 intelligence analysts working in this government location and processing imagery and doing analysis on that, that’s expertise. The government is defining the inputs. They’re defining what level of degree or involvement they want to have in the administration of the program.

We supply the people with the skills that they want and they to a large extent participate in the management of it. The technology side of it is where it’s outcome focused, output based. So when we’re responsible for delivering the outcome and we have the ability to determine what tools we use, how many people to use, how to staff it, how to execute on the mission, and we’re responsible for the outcome. That’s our shorthand for technology.

Unidentified speaker, Analyst: Got it. Great. Going back to the Investor Day you guys did late last year, mean, you gave guidance for high single digit growth, including some small acquisitions, 11% mid-eleven percent margins to 27 A lot, I guess, this feels like has changed since December with the new administration. Just how confident are you that you can still hit those? Or is there any risk to kind of getting there?

Jeff McLaughlin, CFO, CACI: Yes. Thanks. That’s a great question. We remain highly confident in the three year targets that we talked about at our IR day last fall. And similarly, we have affirmed more than a handful of times our guidance for this year, which is in particular with respect to margins is in the low 11s.

And I think we should also point out, we said low 11s for the year and we expected the fourth quarter itself to be low 11s as well. But we remain confident in the guidance we’ve given for the year and the targets that we talked about last fall. And that really goes to the repositioning that we talked about and the fact that we’re focusing on areas that are particularly durable in the current administration’s quest for efficiencies, which we embrace wholeheartedly, as well as being responsive to the other administration priorities related to securing the border and related to piece through strength.

Unidentified speaker, Analyst: Yes, got it. In terms of the growth there, mean, can you talk about some of the areas that are driving that? Because one of the pushbacks I get sometimes is O and M maybe looks kind of flattish. We go to CR this year. We’ll see what happens in ’twenty six.

What enables you to sort of outgrow that? What are the sort of the buckets within that market that are growing faster?

Jeff McLaughlin, CFO, CACI: Yes. Look, our revenue this year will be over $8,500,000,000 Our TAM is a little over $250,000,000,000 So you really have to go below the level of the top line budget and look at the elements of the budget where we have again through this deliberate repositioning put ourselves into areas of the budget that fare well, and remain priorities and have our areas of enduring need generally with bipartisan support. So Jason could talk some more about this, but the whole idea of positioning ourselves in counter UAS in the electromagnetic spectrum, in SIGINT collection systems. These are important areas given the current geopolitical situation and areas where we see durable need.

Unidentified speaker, Analyst: Got it. Can you touch on Doge? I mean this is I’ve talked a lot with clients about this over the last few months. Just sort of how the work that you guys do aligns with some of the priorities there?

Jeff McLaughlin, CFO, CACI: With Doge? With Doge. The long and short of it is if you think about the areas that Doge has been focused on, they’re basically areas where we have again deliberately over the last number of years deemphasized. So we don’t do consulting. We deliver actually outcomes and results.

We commodity like activities, we’ve got down to an absolute minimum, not areas that we spend a lot of time. We don’t do outsourcing. Even if you think about some of the more recent memos that have come out of the DoD related to reselling equipment and things like that, they’re just not areas where we have much, if any, presence.

Unidentified speaker, Analyst: Yes. Got it. Okay. One of the sort of thoughts that Doge could lead to longer term was maybe contract structure maybe a little bit different, maybe there’s sort of more fixed price contracts or sort of value that you guys can create and keep if you’re able to perform well on those contracts. So I guess have you seen any indication that your customers are moving more in that direction?

Or is it too early? And if so, what’s sort of the upside for CACI?

Jeff McLaughlin, CFO, CACI: Well, I would go back to the repositioning that I talked about at the very beginning of my remarks here where we talked about the input versus outputs and being responsible for outcomes has led us in this direction successfully for the last number of years where we have been able to take input focused customer contracts and engagements and make them output focused much to customers’ pleasure. And that has necessitated or that has enabled us to do a great many of these things fixed price, which has led us both save customers money and also give us a little bit of margin advantage. And I would also note that to the extent we’re able to save customers money in this transition, it almost always ends up resulting in incremental volume for us because when they save money, then they go to the next thing on the list that they’d like to have and it gives us opportunities for on contract growth and further expansion of our relationship in a way that’s mutually beneficial.

Unidentified speaker, Analyst: Yes. And I guess maybe following up on that a little bit, I mean there’s a little bit of history in defense industry over the last several years of fixed price development contracts with folks have maybe bid aggressively and end up taking a loss on the how confident are you that you can sort of size all these programs correctly and you’re not taking on undue risk for

Jeff McLaughlin, CFO, CACI: the company? Yes. We’re generally not doing we are not doing that kind of development. So what we’re able to do through a program like Spectral, for instance, is break the program down into sort of smaller more manageable pieces that let us mitigate much of that pricing risk and it also lets us be more responsive to changing context and environment. So when the customer sees a particular development or something that they want to change or tweak, it’s easily picked up in the next step, which is also the next pricing action.

Unidentified speaker, Analyst: Yes. Got it. Okay. I guess maybe on kind of your technical road map, maybe a question more for Jason, whoever wants to take it. You guys have invested in some new technology, new areas over the last several years.

That’s enabled you to win a lot of new big contracts here over last couple of years. So can you talk about are there new priorities that have maybe shifted in the new administration? Or where do you sort of see going?

Jason Bales, Chief Technology Officer, CACI: Right. It’s a good question. And the reality is our priorities have not shifted regardless of administration. That’s because, as Jeff kind of mentioned, right, we don’t focus on kind of the commodity mission capability. We focus on the differentiated mission, the bipartisan national security defense work.

These are long enduring missions that have been there for a while and continue their threats that continue to evolve. And because that’s been our focus, our priorities don’t they don’t just shift, right? They don’t shift within administration. They what they do shift with is they shift with the technology advancements and they also shift with the threat that evolves in the world, right? So as the threat evolves, we evolve with it as well.

And Jeff mentioned kind of in his earlier statements that our change in strategy over about a decade ago to putting investment ahead of need, right? So that’s where we’re looking at what are the upcoming technologies, how do we roll those in, so that changes kind of where we put our investments and where is the threat going in the landscape for us, right? And so those are the things that really drive changes in our portfolio. And those threats have been persistent right now and we still see them. So the electromagnetic spectrum is still a huge area that we invest in and we’ll continue to beef up that part of our portfolio.

Space domain, right, which is a it’s a highly contested area right now with pure adversaries, countries that have the same economic power that we do, that are also taking advantage of the space. So that’s an area that we continue to invest and put a lot of time into. And then of course trying to gain the efficiencies and the insights that come from advancements in technology like generative AI is in every that’s transformational in every part of our lives today.

Unidentified speaker, Analyst: Yes. Got it. I wanted to ask about Homeland Security. So this is one of your biggest customers after DoD, one of the few agencies that were sort of requested the budget much higher for fiscal twenty twenty six. Just talk about, so what your exposure looks like, what are the opportunities that you see that as kind of a growth driver?

Jeff McLaughlin, CFO, CACI: Yes. Jason will want to expand on this and has some details on Beagle in particular that I think you’ll find interesting. But in general, focusing on the priorities, including securing the southern border has been a great advantage for us. And, since the January, the early flurry of executive orders, we’ve been able to very quickly respond to a couple of areas specifically around securing the border.

Jason Bales, Chief Technology Officer, CACI: Yes. In fact, in February of this year, once the executive order started to come out and really a lot of emphasis started to roll forward was our one of our, I think, highest months for delivering additional software capabilities, so deployment, right? So we deploy over 1,000 deployed releases a year to customers in Port Of Control every year, right? So that’s they come to us with this think of like your agent that’s on the line, he’s got his tablet and he’s got a specialized application that’s letting him do his job. And something changes in his day to day routine, he needs that capability to be updated, right?

We can turn that really fast because we pull commercial capabilities through commercial processes. We’ve been doing agile software development for the government for over ten years. So we have the tools in place, we have the process in place. So as Department of Homeland Security is building up and they need their IT modernization done, we’re rightly positioned in there. We can move at the speed of the threat.

We can move at the speed that they expect from commercial capability, pull that through. As they need new sensors and effectors, right, for long range sensing and the electromagnetic spectrum as an example. We know that over the border people use drones to do things nefariously over the border. We have counter drone capability that we bring to table. We also have intelligence as that mission is increasing and expanding.

The stuff that we have done for the intelligence agencies on the other sides of the world and here, we can expand into DHS and the work that they do to be able to give them that larger kind of intelligence picture of everything that’s going around. So we have a lot of play and opportunity to take advantage of their growing mission as well.

Unidentified speaker, Analyst: Got it. I wanted to ask about international. I mean it’s been a pretty small percentage of your business historically, low single digit percentage. Is there an opportunity to expand that at all? If so, kind of what areas could that be?

Jeff McLaughlin, CFO, CACI: Yes, there is. And in the technology side of the business in particular, there are a number of SIGINT technology solutions that we’ve had some acceptance success and acceptance within in Eastern Europe and Ukraine. Our SPECTRAL program, we fully expect at some point we’ll have broader FMS appeal and potential to allied navies. There are a number of areas that we see opportunities. It’s worth noting though that we’re not in pursuing and developing those, we’re not building kind of an international marketing organization or anything.

I mean, we’re following customers and developing opportunities within the capabilities that we have.

Unidentified speaker, Analyst: Yes. Got it. I guess is there a reason historically that hasn’t been bigger? Mean if I look at the defense manufacturing companies, international is 20%, 25%, 30% of the business. Is it more sensitive to some of the stuff that you do maybe that makes them more difficult?

Or is there some other reason maybe?

Jeff McLaughlin, CFO, CACI: Some of it is sensitivity and some of it is our size. As an alumnus of a large OEM, I can tell you that the marketing cycle, the sales cycle on airplanes for instance is hugely long. I mean there’s a of cost associated with building and marketing airplanes. And it’s a different sort of business model. They’re large enough.

It’s a large enough purchase. It’s got a very long tail on it. Obviously, buying the plane is just the beginning. It’s got logistics and everything else, that make a business case make more sense for building and maintaining that sort of infrastructure. And our foreign opportunity our international opportunities are generally not that extensive.

They’re nice margin, but you sell it and it’s sold. So it’s not a sticky long term franchise sort of engagement.

Unidentified speaker, Analyst: Yes, makes sense. I wanted to talk a little bit about capital deployment. Mean historically you guys for a long period very focused on M and A. Now you’ve sort of I think been a little bit more flexible in terms of buying back stock. Could you talk about sort of how you view those two options and what does kind of the M and A pipeline look like?

Jeff McLaughlin, CFO, CACI: Yes. So the watchwords for capital allocation for us are flexible and opportunistic. And we have over the last five years done an extensive amount of acquisitions and share repurchases. I think over the last five years, we’ve repurchased like 15% of our outstanding shares and made 10 or 12 acquisitions.

So our So our target leverage, we like to be between 2.53 times our trailing twelve months EBITDA. We think that gives us the right sort of debt component in our financing, in our capitalization to give us the benefit of debt in our weighted average cost of capital, but also gives us the opportunity to step up and be opportunistic if we want to go up above three, for some period of time, short period. And actually we have a pretty established track record over the last decade or so of three or four times we’ve been up to like 3.5, 3.7 and then get back down into the 2.5 to three. So we run the business wanting to be in the 2.5 to three. We’re 2.9 right now.

We then as we move in that range where we like to be, we are continually looking at share repurchases and the acquisition pipeline. And we were obviously grounded in return analysis, but relative return is also an important part of trading those two off. So we will always be monitoring and are monitoring and always monitor our acquisition targets, maintain an open dialogue with two dozen or so companies largely private that fit into particular gaps in capability or technology. And in the immediate instance, sellers are not particularly inclined to sell Valuations have obviously been a little bit volatile. And absent some other reason to sell to the extent it’s elective, people are generally waiting and watching, which I think makes good sense as a buyer as well as a seller.

So I don’t see any near term sort of compelling acquisition candidates, but we do have a pipeline that’s maturing and I’m confident that we will make more acquisitions. Obviously, that’s an important part of our Yes.

Unidentified speaker, Analyst: I guess from a sort of a portfolio standpoint, are there areas that M and A makes sense to kind of fill in gaps? Or would it sort of be more focused on when valuations become more reasonable and kind of the financial opportunity makes sense? Yes.

Jeff McLaughlin, CFO, CACI: Very definitely. I mean, you’ll appreciate it. I don’t want to probably talk about it in any real but there are a number of technologies and customer positions where we would be quite eager to fill in gaps and bridge existing capabilities to broaden our capability, is the way we think about it.

Unidentified speaker, Analyst: Yes. Got it. Okay. Could you maybe talk about a couple of recent acquisitions you guys have done, Azure, Applied Insight, now that we’ve had these for a couple of quarters, just what you’re seeing are they sort of performing up to your expectations and maybe are there any examples of business that maybe you were able to win because you have these capabilities that maybe weren’t before?

Jeff McLaughlin, CFO, CACI: Yes. They are performing to our expectations. And Azure, in particular, has really proven to be a great, great acquisition, both economically as well as strategically. And in the case of Azure, I’ve referred a couple of times to our Spectral program, which is the next generation SIGINT collection suite for the Navy surface ships. Azure has the manufacturing capability and some important technology related to Spectral.

They were on our Spectral team anyway, but they were also the prime for the earlier program, which is a program called C INC F, S S E E, increment F, where they actually displaced Boeing to win INC F. And the fact that we’ve been able to operate the programs in a coordinated way has actually let us be able to accelerate and get some of the spectral capability into the fleet more quickly than we would have otherwise. And so that’s turned out we talked last quarter in our last earnings call about spectral enabling kits, SEK, which is that capability and implementing it on C increment F and moving it into spectral and getting it out earlier, where you can appreciate and into Paycom in particular, there’s a real need to have all the capability we can as fast as we can.

Unidentified speaker, Analyst: Yes. Got it. Got it. Could you talk about space? So I mean, a big spending priority the new administration with Golden Dome.

You guys made an investment with SA Photonics years ago. I think that’s starting to ramp up, but just kind of opportunities for that part of the business to grow.

Jeff McLaughlin, CFO, CACI: Yes. SA Photonics is an interesting story. We’re moving out of the development phase into production. We’ll deliver four or five times as many optical communication terminals this year as we did last. So that’s transitioning nicely into the next phase.

Golden Dome has presented us with some really interesting opportunities and Jason is better suited to talk about it in little detail. But we’re very excited about a couple of things we see in Golden Dome.

Jason Bales, Chief Technology Officer, CACI: Yes. Just real quick before hitting that, the SA Photonics is a great example. As Jeff talked about, our M and A strategy, right, is about closing gaps, right? We had optical communications capabilities in the other orbits around the planet, right? So you think in GEO, MEO, HEO, that kind of stuff.

We didn’t have LEO. SA photonics filled that out. So now we have optical communication terminal capability in all orbits and out in the cis lunar and beyond, right? That’s a huge part of our portfolio. So good example of how we employ M and A to actually close our portfolio, right?

But on to the Golden Dome, another example of how we have a portfolio I think that is robust and in a good position to tackle the growth priorities of the new administration as they add to the missions that are here, right. We’ve been a big part of Golden Dome is protecting ourselves from aerial threats, right. And that’s a multilayered approach. It’s going to take place in space. It’s going to take place in high orbit and low orbit on the ground, all those capabilities.

We’ve been doing counter drone activity on the other side of

Unidentified speaker, Analyst: the world for over two decades.

Jason Bales, Chief Technology Officer, CACI: And not just the little I say this to many other people, not just the little drones that Ukraine and Russia, which are important, but also the big nation state drones, the drones whose wingspan is the size of this room kind of a thing, right? We’ve been doing that for two decades, analysts that can are constantly watching that threat evolve. So as we need we recognize we need to kind of put this virtual bubble around The United States Of America around here, we’re well positioned to bring that capability over. So that it’s not just the little drones, it’s also the nation state protection of the homeland. We can bring that and slide it right in and fill that part of the layer, the important part of the layer of that portfolio.

So long range sensing, counter drone capability, the analysts, right, and then the like the common intelligence operating picture that kind

Unidentified speaker, Analyst: of glues it all together. Those are

Jason Bales, Chief Technology Officer, CACI: things we can slide right over with our portfolio.

Unidentified speaker, Analyst: Got it. Got it. All right. I have a couple more up if there’s any in the audience. I guess maybe think of the reconciliation bill that’s going through Congress now.

Mean, pile of money. I’m not sure we know like exactly where it’s going to go to with some of your customers. But I guess as you look at that, is there maybe opportunity to do better than I guess this fiscal year is almost wrapped up, but longer term guidance, could you do maybe a little bit better if that does pass?

Jeff McLaughlin, CFO, CACI: Yes. We certainly expect the reconciliation bill to give us some upside. We don’t know the details yet. Obviously, it’s got to go through conference and the House and Senate bills have to converge on a single position. But right there’s $300,000,000 or so of multiyear money in right in our customer set, which for a company of our size, 8,500,000,000.0 or so revenue, that’s a meaningful opportunity.

So there’ll be a fair amount of things in there that we won’t that won’t be addressable by us, customs and border protection agents, some of the more commodity like equipment and whatnot. But certainly, we expect there to be some meaningful opportunity both in the DHS bill and in the DoD bill.

Unidentified speaker, Analyst: Yes, got it. Maybe artificial intelligence, I wanted to bring that up. Some of your competitors have talked about that a little bit more than CACI has. But could you maybe talk about how you’re incorporating that in some of these government programs? Also, I’m kind of curious how the splits are worse between you guys and some of the commercial companies who are developing generative AI sort of systems?

Think that’s you.

Jason Bales, Chief Technology Officer, CACI: Yes, absolutely. One of the things at CACI, the way that we treat artificial intelligence is we treat it as a tool for enabling mission outcome, right? It’s not the end state itself. And the other thing about artificial intelligence is we’ve been doing AI for fifteen plus years, right? But when people say AI nowadays, they’re talking about generative AI.

They’re talking about the chat bots, need to online and it’s generating content for you. Artificial intelligence has a vast field that does computer vision, we’ve been doing for geospatial intelligence for a very long time. We’ve been employing artificial intelligence in cyber capabilities, offensive and defensive capabilities. When it comes to generative AI, that really is transformational, right? Whereas the other AIs we’ve been providing, they’re giving specific mission outcomes and efficiencies.

Generative AI is putting us in a position to transform the business, both our internal operations and just being better in how we be a company and do our work, but also in providing mission outcome that we weren’t able to achieve before, right? So it’s really CACI looks at it as a tool. It’s a tool to apply across. And we currently work with customers today where we’re finding ways to put it in to not displace people, but let the people do more important work, right? So, software development is a big place.

We use it internally, right? So, rather than having to worry about what the syntax of this software language is, let the AI bot let the AI do that for us and we can focus on developing the actual software solution that solves the mission problem. So it’s a tool to apply to the problem and we apply both inside the company and externally to our customers.

Unidentified speaker, Analyst: Yes, got it. All right. Yes, I think that covers all my questions. I don’t know if anybody in the audience has some, but maybe we can wrap it up there.

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