CACI International (NYSE: CACI) issued earnings and revenue guidance below analyst expectations Wednesday for the government services contractor’s next fiscal year that starts July 1 on higher indirect costs and selling expenses in conjunction with a forecasted seasonal sales decline in the summer.
An additional seven months of the National Security Solutions business acquired in February from L-3 Communications (NYSE: LLL) carried into next fiscal year factored into CACI’s guidance that expects indirect costs and selling expenses to grow 12-to-14 percent compared to FY 2016.
The company forecasts the revenue decrease to occur between the fourth quarter of the current 2016 fiscal year and the first quarter for FY 2017 at a rate similar to the average calculated over the last three years.
Agencies will also reduce some pass-through material purchases and the company also elected not to pursue some recompetes or other contract competitions based solely on low price criteria, CEO Ken Asbury told investors in a Thursday morning conference call.
Arlington, Virginia-based CACI expects FY 2017 earnings of $6.02-to-$6.43 per share compared to Wall Street’s $6.50 EPS forecast, net income at $150 million-to-$160 million and revenue of $4.05 billion-to-$4.25 billion versus the analyst outlook of $4.4 billion with the NSS business’ contribution at nearly $600 million.
The company forecasts a year-over-year net income increase of 16.67 percent and total revenue to go up 10.67 percent based on the FY 2016 guidance’s midpoints, while organic sales growth forecasts excluding NSS show a decline of 3-to-5 percent.
CACI is one of 30 stocks listed in Executive Mosaic’s GovCon Index and runs its fiscal calendar on a July-June basis.
Guidance for CACI’s current 2016 fiscal year that ends June 30 remains at earnings of $5.37-to-$5.65 per share versus analyst forecasts of $5.56 EPS, net income at $133 million-to-$140 million and revenue in the range of $3.7 billion-to-$3.8 billion compared to the Wall Street outlook of $3.74 billion.
CACI issued that outlook in April in conjunction with its third quarter financial statement that included a slight cut in the company’s outlook on delayed timings of some contract awards.
As of Wednesday’s close, shares in CACI have gained 7.64 percent since the start of the year and 16.14 percent over 12 months.