Prepared remarks
Thank you for joining us. Welcome to the CACI International Fiscal 2024 Third Quarter Conference Call. This call is being recorded, and all lines are currently in a listen-only mode. We will provide details for questions later in the call. I would like to hand it over to George Price, Senior Vice President of Investor Relations. Please proceed.
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 fact 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's 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 Jeff 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 awards of $3.5 billion represent a 1.8 times book-to-bill for the quarter and drove trailing 12-month book-to-bill to 1.5 times. About half of our awards were for new work at 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 our expectations and like most years, we expect we'll 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 five 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 with 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 with speed and agility as adversaries change their tactics. On our US Navy Spectral program, we are working with our customer to modify and enhance what will be delivered 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 Five Eyes countries, select 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 being mounted on OEM 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 modernization.
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 as they respond to an ever-increasing list of critical world events. IT modernization using our Agile software development and DevSecOps capabilities also recently helped the US Marine Corps achieve the first-ever clean financial audit for a branch of the military. This highly visible achievement adds to our strong record of past performance and enhances our ability to pursue additional modernization opportunities across the US government. Slide 8, please. Second, we're continuing to enhance the long-term visibility of CACI's business through disciplined bidding on 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 these drove our third quarter backlog to a record $28.6 billion, representing nearly four years of annualized revenue. The weighted-average duration of awards that we booked into backlog remains well above five 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 in the delivery duration metrics provide visibility not only to support current year growth but also 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 UK and here in the US 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, the acquisition is accretive in year one. 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 position CACI to drive topline 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 three acquisitions we've made over the past 12 months. The 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 Days 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, our modest leverage of two times net debt to trailing 12 months EBITDA and our access to capital provide 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 and $465 million, with an intended increase in adjusted earnings per share to between $20.13 per share 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, though 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-month book-to-bill ratio of 1.5 times reflects strong performance in the marketplace. Our record backlog of $29 billion increased over 13% from the year ago and represents just under four 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 in 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 two quarters with 90% of those for new business. Our ability to increase both of these metrics from last quarter, even while delivering a 1.8 times book-to-bill ratio reflects the healthy demand, successful strategic positioning, differentiating 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 in 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.
Questions and answers
Thank you. We will now begin the question-and-answer session. Your first question is from Robert Spingarn with Melius Research. Please go ahead.
Hey, good morning.
Good morning, Robert.
Very nice quarter, John and Jeff. And Jeff, I've got a question for you and then a follow-up for John. But 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 as a good jumping off point? Or should we, you know, be thinking about something in the lower 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.
Well, 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.
I think the basis of your question may be slightly incorrect. You can't automatically link fixed pricing to high margins and cost type work to low margins. We have previously noted that we achieve strong margins on certain high value-added cost type projects. Therefore, I encourage you to consider the business as a whole.
Hey, Rob. This is John.
What I was going to say, I'm sorry, John. Go ahead.
No, go ahead, Rob.
Jeff, what I was getting at was inflation. And so, not so much whether margins 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?
Yeah, I see. Inflation is not really a major factor for us. A lot, particularly in 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.
On our software-based technology deliveries, many of these are completed within the same quarter. We continuously adjust the pricing for this software technology, staying responsive to factors like supply chain issues and inflationary costs. However, we manage to reprice items effectively within that segment of our portfolio. For our larger fixed-price technology programs, even over three to five years, we excel in securing talent with the right skills at competitive prices while ensuring efficiency. In our longer-term technology projects, we consistently find ways to enhance efficiency. Since most of these projects are software-based, we are able to explore better, faster, and more cost-effective methods for software development, enabling us to achieve the planned margin.
Okay. And then, John, just real quickly, the one I had for you, you know, you did the two acquisitions; one was in the UK. You've had a presence in the UK 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 comment, on our software-based technology side, we are looking at building ourselves out more broadly in the international front. You know, we're probably in the second or third inning there, really looking at most NATO countries, our Five Eyes countries you already delivered to today. Canada was the last 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. You know, one, it allows us to drive our addressable market for those, for that technology. And then, second, it is where the, you know, largest threat is. And we'll I'm sure, we'll talk more about that during the rest of the call. So, Rob, thanks for your question.
Hey, good morning. Thank you for the question.
Hi, Bert.
Good morning.
Hey, Jeff, John. So, maybe just, you know, sticking with the margin theme, you saw a nice step up, you know, going from, you know, 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, you know, tech sales timing?
We've previously discussed our investments in photonics. We have several programs transitioning into higher volumes, and some of those related investments have concluded as we've indicated in recent quarters. We will always experience some variability from quarter to quarter due to our strategy of investing in advance of demand. These investments will consistently be prioritized and might result in some fluctuations in margins. John, would you like to add anything?
Sure. Bert, regarding our software technology sales, which includes photonics in all our Counter-UAS systems and SIGINT collection systems, these sales cycles can be highly variable. They are not typically driven by long-term backlog but consist mainly of booked work. Consequently, I expect we will see fluctuations in quarterly margins for some time, which is why we focus on four-year margins. This is particularly relevant because we are a technology delivery company, which differs from providing pure expertise where margins tend to be more consistent. The current balance between technology and expertise does introduce variability in our quarterly results. We will discuss this further when presenting our '25 guidance, as it's an important aspect to recognize. It’s not unusual for us to experience fluctuations in margins, reflecting the nature of the high-margin work we undertake. Additionally, margins are a crucial element of our value creation model, and we are committed to focusing on them long-term.
Jeff mentioned the decline of some photonics investments. While we won't cut back on investments that support future growth, we also won’t take extreme measures for short-term margin improvement. We value free cash flow per share for its role in margin enhancement and facilitating value-creating capital deployment and long-term growth. Ultimately, we seek to enhance visibility on organic growth and gradually improve margins, though this won't happen annually. I hope this adds some clarity.
I have a follow-up question about some of the technology areas. You've had significant success with recent contracts across various sectors. I'm curious how you would prioritize photonics, Counter-UAS, EW, SIGINT, and network security as growth drivers in the next couple of years. You don't need to provide a specific ranking, but what would you say is at the top of your list?
Yeah, 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, right? 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 and 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, you know, tactics, technology, and procedures are changed, and the government, our customers, and NATO allies as well need technology that can quickly adapt. Photonics for, you know, we're going to hit volume there as we get through 2025 and into 2026. You know, we'll always have investments there as we work on being able to work on producibility. But overall, you know, 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 topline and bottom line growth.
Thanks, John.
Hi. Good morning, John, Jeff, and George. I just wanted 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 how should 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.
Yeah. Thanks for the question. We, the observation you make about the M&A pipeline in reference to our comments is correct. There are, we see some expanding opportunity lists. 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 four or five quarters. So even though we didn't buy any shares in the quarter, we are continuing to evaluate both opportunities, we're very attentive to share repurchases.
Yeah, John, and at a macro level, look, we're flexible 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, we're looking at 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 other thing I'd mention is that timing of the future M&A candidates is a consideration in our capital deployment assessment as well, right? So, it's not always when we're in leverage of X, we have Y number of different companies we'd like to make a future growth part of CECI. 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 long term, which is why we're focused on free cash flow per share and really appreciate the question.
Perfect. Thank you. And 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 topline perspective, sort of the cadence on maybe not each one, but if you could, sort of EITaaS and NSA and the Navy program, just sort of how the revenue went peaking over the next couple of years?
Yeah, sure. So look, on our large 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 will continue to ramp that at a reasonable rate as we go through '25. So we'll get to 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 ramped 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 2025 and beyond. If you all remember, that was a BPA, total value of $5.7 billion over a ten-year period. We recognized about $2 billion of that in the first quarter of '23. So that starts with upfront planning. We're doing some design work there, you know, a picture of lower volume. The customer did ask us to take over from the small-level incumbents, take their work over sooner because they want to see that work improved.
So we're able to do that as well. So, you know, customers are very, very pleased. Last one is Spectral, right? That's a real gem technology program, we did ramp ahead of plan. Connected to my prepared remarks, you know, 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, you know, what a refreshing discussion we had, because we could talk about the threats changing, how do we make changes to this large technology program, you know, without the ACAT I kind of follow-on that's a four-year delay. You know, we're sitting there working alongside shoulder-to-shoulder, hip-to-hip with this customer who frankly has the responsibility of protecting their surface fleet from the things that you're reading about in the news today. So, you know, great work there. We would see future expansion definitely into '25 and '26. So hopefully that provides some of the color you were looking for, Jan.
Perfect. Thank you. I'll jump back in the queue. Really appreciate it. Thank you.
Good morning, everyone.
Good morning.
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 AUKUS gives, particularly in the Pillar II of AUKUS, 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?
Thanks, Mariana. Asking for all of our secrets. All right. So, let me try to unpack that. Look, on the international front, it's no secret that on the 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 deliver technology to a number of Five Eyes countries. As we expand to go deeper into the Five Eyes, 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 to Poland, Latvia, Lithuania, Romania, and the like. And we had two of our folks spend about ten days in 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 of the meetings we'd like, but the supplemental helps. In addition, a lot of those Eastern European companies are spending their own defense dollars, including in 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 in 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 AUKUS, 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 four of our sales channels for all those products through current programs or records, direct sales, and then 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 looking to do there.
Thank you. 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 informs tech. So, a lot of the information we get about what other countries are doing, if you look at our expertise that focuses on SOF support on folks out in the field on the wrong 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 target, where and in what order. And that is the beauty and the strength of delivering expertise and tech and how those two parts of our business support each other. Thanks for the questions, Mariana.
Hey, guys. Good morning. Thanks for the question.
Good morning, Matt.
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 with the quadrant that you're kind of laying out like a 4% or 5% kind of market growth, and 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.
We are currently a reliable mid-single-digit growth company in the long term. While we are still in the development phase for 2025 and beyond, we anticipate solid growth above the mid-single digits moving forward. This aligns with our focus on free cash flow per share, especially considering our improved EBITDA margins, which are now in the high 10s range. We're excited about our progress since our 2019 Investor Day. As we look towards future investments and growth, we will concentrate on near-peer competition and counter-terrorism efforts. We've emphasized that this approach is not an either-or situation but rather a combined strategy. Our focus on network modernization, the importance of the electromagnetic spectrum, and various technologies remains critical as we respond to increasing threats. We continue to lead in counter-UAS solutions, recognizing the ongoing dangers in the world. In the space sector, we are establishing a growing backlog and are the first supplier to fully design and produce in the U.S. Looking ahead, we see substantial opportunities for growth in a significant addressable market, positioned as a mid-single-digit growth company while prioritizing margins and free cash flow per share.
Great. Thanks. 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. Yeah, 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.
Hey, good morning. This is Jasper Bibb on for Tobey.
Hi, Jasper.
Really nice growth in the civil business this quarter. Last few quarters, I think that has been, I guess, flat to down with the transition in the background screening contract with 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?
Yeah, sure. John will 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, you know, the portfolio broadly is kind of hitting on all cylinders. Really can't point to one or two or three programs and say it's this or that. It's very broad-based.
I believe we can look forward to future programs that will drive revenue. This year, beyond EITaaS and the large Intel expertise program, we will also discuss ELITE, GENMOD, and a few others. We are not just focused on one or two programs; we are aiming to find our stride. However, it's important to note that we have technology programs that we do deliver on, and whenever we deliver, that revenue diminishes. There will be some ongoing support, but as a company nearing $8 billion, we will inevitably have programs that are phased out, which indicates that we have met our delivery expectations. That’s why we’re currently developing our 2025 plan to provide the right range for our most probable outcomes. If you recall our projections from August, we provided a growth rate along with a low and high range. I encourage you to review what we presented as both ends of the spectrum. Of the six key factors that could drive growth, five of the six benchmarks on the high end were actually met, demonstrating that while not every year will be the same, there are times when things align successfully.
Awards can be unpredictable, so we cannot rely on getting specific contracts in any given quarter. As many of you are aware, considering our fiscal year and the government's fiscal year, there will be occasions when significant awards come too late to impact the current year financially. We anticipate those questions, but there are moments when we must indicate that these will be reflected in the next year. This brings us to the challenge of knowing what is ending and what is emerging. That’s why Jeff and I often note that we are not ready to discuss 2025 just yet. We are still in the process of evaluating everything, but by August, we will have a clearer view of how 2024 is shaping up, along with some solid guidance for future expectations.
Good morning. This is Rocco on for Seth.
Good morning.
Good morning.
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 you mentioned earlier? Or is there more lag in these awards?
I appreciate the last question about 2025. We will be more transparent when we reach that point. As for the first part of the question, we’ve had significant success, which is largely due to our culture and the strength of our business development team and solution architects, supported by a deep bench of knowledgeable professionals. This is not driven by just one or two individuals; our business development and sales teams are closely linked to the P&L centers. They are focused on how we can position ourselves competitively. The large win this quarter, the ELITE program, involved extensive collaboration with our existing customers to determine how we can provide more value, especially given the increasingly challenging global environment. This initiative has been in the works for two years, aiming to enhance our collective efforts and support across two combatant commands. It’s a detailed process involving more than five people; it actually involves 150 individuals dedicated to how we can shape our strategies.
We have a clear mantra within the company as we plan for 2025. Most of our bidding lineup for fiscal year 2025 has already been submitted in 2024, with additional solutions being bid shortly. Looking ahead to 2026, we aim for growth in wins and awards. This approach has helped us maintain a book-to-bill ratio above 1.0 for many quarters, and our trailing 12-month book-to-bill is consistently over 1.0. Driving growth is ingrained in our company ethos, and we will adhere to our strengths. We won't take on projects we’re unfamiliar with or pursue work simply based on price with empty promises of improvement. Our focus is on a long-term strategy.
Hi guys. Good morning. Congrats on a great quarter. Thanks for taking my question. 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 will 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, you know, the portfolio broadly is kind of hitting on all cylinders. Really can't point to one or two or three programs and say it's this or that. It's very broad-based.
I believe you can look forward to the programs we will discuss that will drive revenue. This year, in addition to EITaaS and the large Intel expertise program, we will be addressing ELITE, GENMOD, and others. We are not solely focused on one or two programs; we are looking to find our momentum. While we have technology programs that we deliver, which do impact revenue, there is some sustainability. However, for a company of our size, nearing $8 billion, we will have programs that reach completion, which is a positive development as it means we fulfill our commitments. This is why we are currently developing our plan for 2025. It will provide a range for you to assess our most likely outcomes. If you recall, back in August, we shared a growth rate along with a range, indicating both the low and high ends. I encourage you to revisit what we previously presented as it related to growth drivers, and you will see that most of the high-end benchmarks were met, which was quite challenging.
Awards can be unpredictable; we can't always anticipate when they will come in a specific quarter. Given our fiscal year and the government's, there will be instances when we win significant awards that will not impact the current year. Expect those discussions, but sometimes we will indicate that outcomes will be reflected in the following year. This cycle of what is concluding or starting is a key aspect of our conversation. Jeff and I often mention that we are not ready to discuss 2025 casually; it's simply because we are still in the process of forming our plans. By August, we will be well-positioned to provide a comprehensive update on 2024, along with our forecasts for the future.
Good morning.
Good morning, Louie.
Following up on the Spectral comments, but what is the progress in terms of installations across the Navy surface fleet?
We are currently in the design phase and have completed several PDRs and CDRs with effective system and software engineering practices. We are evaluating the program's progression and aiming to deliver a minimally viable product, which includes the initial set of capabilities for the Navy's 200 plus surface ship fleet by the end of this calendar year. Depending on how this initial phase goes, we anticipate making deliveries to the fleet by the end of next year, 2025. This timeline is flexible and we should have a clearer picture by August. Presently, we are in the development period and expect to deliver the product at the end of this year, with further developments to follow. The ramp-up will be evident in 2025, and we expect to see an increasing number of ships involved as we move into 2026 and beyond.
Great. And for the software solution, is the vision that it would last for the entire useful life of the ship and 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 threat such that you know 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 seven years, but do you envision that your software is going to last for decades and decades?
Thank you, Louie. There are two main points to address. First, we offer an open architecture solution, which many claim but we effectively deliver. This open architecture allows other companies to decrypt various signals with their equipment, helping us establish signatures and apply appropriate countermeasures to protect surface ships. This positions us well for the future. Second, our ability to make software updates in response to evolving threats enhances our capability as we move forward. We are actively engaging in discussions about Counter-UAS with various levels of the DoD and intelligence community, relying on the GOTS software baseline that the government owns, which we developed over decades. We continually build on this foundation. As threats evolve, we can swiftly collect data, decrypt, and implement countermeasures in a matter of hours, unlike the traditional method of bringing a ship to port to upgrade hardware, which is not sustainable in the current threat landscape. We are precisely where we intend to be as a software-focused company, which is our strength, and we aim to empower our customers to adapt accordingly. Thank you for that question.
Great. Thanks so much.
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 Jim Sullivan are available after today's call. Please stay healthy and all 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.