UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to        

Commission File Number 001-31400

__________________________________

CACI International Inc

(Exact name of registrant as specified in its charter)

____________________________________

Delaware	54-1345888
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12021 Sunset Hills Road, Reston, VA 20190

(Address of principal executive offices)

(703) 841-7800

(Registrant’s telephone number, including area code)

__________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CACI	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).  Yes x   No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

As of April 11, 2024, there were 22,296,410 shares outstanding of CACI International Inc’s common stock, par value $0.10 per share.

CACI INTERNATIONAL INC

		PAGE
PART I:	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II:	OTHER INFORMATION	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	Signatures	26

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Revenues	$	1,937,456	$	1,744,270	$	5,621,537	$	4,999,445
Costs of revenues:
Direct costs	1,290,903		1,143,781		3,819,072		3,293,867
Indirect costs and selling expenses	430,134		410,235		1,244,122		1,180,619
Depreciation and amortization	35,115		35,220		106,385		106,255
Total costs of revenues	1,756,152		1,589,236		5,169,579		4,580,741
Income from operations	181,304		155,034		451,958		418,704
Interest expense and other, net	27,668		23,570		80,758		59,705
Income before income taxes	153,636		131,464		371,200		358,999
Income taxes	38,286		30,722		85,933		82,031
Net income	$	115,350	$	100,742	$	285,267	$	276,968
Basic earnings per share	$	5.17	$	4.37	$	12.73	$	11.87
Diluted earnings per share	$	5.13	$	4.33	$	12.63	$	11.76
Weighted-average basic shares outstanding	22,292		23,055		22,407		23,329
Weighted-average diluted shares outstanding	22,478		23,277		22,593		23,546

See Notes to Unaudited Condensed Consolidated Financial Statements

3

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Net income	$	115,350	$	100,742	$	285,267	$	276,968
Other comprehensive income (loss):
Foreign currency translation adjustment	(3,500)		4,025		(1,255)		3,659
Change in fair value of interest rate swap agreements, net of tax	7,373		(10,001)		(6,417)		4,012
Total other comprehensive income (loss), net of tax	3,873		(5,976)		(7,672)		7,671
Comprehensive income	$	119,223	$	94,766	$	277,595	$	284,639

See Notes to Unaudited Condensed Consolidated Financial Statements

4

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	March 31, 2024		June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	159,226	$	115,776
Accounts receivable, net	1,013,677		894,946
Prepaid expenses and other current assets	220,623		199,315
Total current assets	1,393,526		1,210,037
Goodwill	4,138,450		4,084,705
Intangible assets, net	490,004		507,835
Property, plant and equipment, net	188,226		199,519
Operating lease right-of-use assets	303,926		312,989
Supplemental retirement savings plan assets	98,962		96,739
Accounts receivable, long-term	12,557		11,857
Other long-term assets	178,733		177,127
Total assets	$	6,804,384	$	6,600,808
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	61,250	$	45,938
Accounts payable	363,451		198,177
Accrued compensation and benefits	257,485		372,354
Other accrued expenses and current liabilities	402,656		377,502
Total current liabilities	1,084,842		993,971
Long-term debt, net of current portion	1,631,150		1,650,443
Supplemental retirement savings plan obligations, net of current portion	112,455		104,912
Deferred income taxes	36,616		120,545
Operating lease liabilities, noncurrent	321,324		329,432
Other long-term liabilities	252,633		177,171
Total liabilities	$	3,439,020	$	3,376,474
COMMITMENTS AND CONTINGENCIES (NOTE 9)
Shareholders’ equity:
Preferred stock $0.10 par value, 10,000 shares authorized, no shares issued or outstanding	$	—	$	—
Common stock $0.10 par value, 80,000 shares authorized; 43,037 shares issued and 22,296 outstanding at March 31, 2024 and 42,923 shares issued and 22,797 outstanding at June 30, 2023	4,304		4,292
Additional paid-in capital	613,090		546,334
Retained earnings	4,225,883		3,940,616
Accumulated other comprehensive loss	(12,723)		(5,051)
Treasury stock, at cost (20,740 and 20,126 shares, respectively)	(1,465,325)		(1,261,992)
Total CACI shareholders’ equity	3,365,229		3,224,199
Noncontrolling interest	135		135
Total shareholders’ equity	3,365,364		3,224,334
Total liabilities and shareholders’ equity	$	6,804,384	$	6,600,808

See Notes to Unaudited Condensed Consolidated Financial Statements

5

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	285,267	$	276,968
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	106,385		106,255
Amortization of deferred financing costs	1,644		1,688
Non-cash lease expense	50,765		52,293
Stock-based compensation expense	35,016		30,564
Deferred income taxes	(36,231)		(84,794)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net	(109,617)		(80,116)
Prepaid expenses and other assets	(24,254)		(42,137)
Accounts payable and other accrued expenses	179,922		62,116
Accrued compensation and benefits	(117,580)		(62,522)
Income taxes payable and receivable	2,483		28,825
Operating lease liabilities	(55,111)		(58,667)
Long-term liabilities	21,434		5,481
Net cash provided by operating activities	340,123		235,954
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(41,091)		(40,844)
Acquisitions of businesses, net of cash acquired	(81,577)		—
Other	1,974		1,626
Net cash used in investing activities	(120,694)		(39,218)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities	2,421,000		2,384,000
Principal payments made under bank credit facilities	(2,426,625)		(2,314,969)
Proceeds from employee stock purchase plans	8,374		7,638
Repurchases of common stock	(158,426)		(270,449)
Payment of taxes for equity transactions	(19,945)		(14,115)
Net cash used in financing activities	(175,622)		(207,895)
Effect of exchange rate changes on cash and cash equivalents	(357)		3,144
Net change in cash and cash equivalents	43,450		(8,015)
Cash and cash equivalents, beginning of period	115,776		114,804
Cash and cash equivalents, end of period	$	159,226	$	106,789
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	101,965	$	131,114
Cash paid during the period for interest	$	71,089	$	47,941
Non-cash financing and investing activities:
Accrued capital expenditures	$	1,000	$	4,803
Landlord sponsored tenant incentives	$	9,183	$	3,883

See Notes to Unaudited Condensed Consolidated Financial Statements

6

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

	Common Stock Shares   Amount			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Shares     Amount			Total CACI Shareholders’ Equity		Noncontrolling Interest		Total Shareholders’ Equity
Balance at December 31, 2023	43,027	$	4,303	$	602,613	$	4,110,533	$	(16,596)	20,742	$	(1,465,364)	$	3,235,489	$	135	$	3,235,624
Net income	—	—		—		115,350		—		—	—		115,350		—		115,350
Stock-based compensation expense	—	—		12,067		—		—		—	—		12,067		—		12,067
Tax withholdings on restricted share vestings	10	1		(1,783)		—		—		—	—		(1,782)		—		(1,782)
Other comprehensive income, net of tax	—	—		—		—		3,873		—	—		3,873		—		3,873
Repurchases of common stock	—	—		(134)		—		—		8	(2,492)		(2,626)		—		(2,626)
Treasury stock issued under stock purchase plans	—	—		327		—		—		(10)	2,531		2,858		—		2,858
Balance at March 31, 2024	43,037	$	4,304	$	613,090	$	4,225,883	$	(12,723)	20,740	$	(1,465,325)	$	3,365,229	$	135	$	3,365,364
Balance at December 31, 2022	42,911	$	4,291	$	578,470	$	3,732,107	$	(17,429)	19,404	$	(1,047,328)	$	3,250,111	$	135	$	3,250,246
Net income	—	—		—		100,742		—		—	—		100,742		—		100,742
Stock-based compensation expense	—	—		10,368		—		—		—	—		10,368		—		10,368
Tax withholdings on restricted share vestings	8	1		(976)		—		—		—	—		(975)		—		(975)
Other comprehensive loss, net of tax	—	—		—		—		(5,976)		—	—		(5,976)		—		(5,976)
Repurchases of common stock	—	—		(50,089)		—		—		731	(217,026)		(267,115)		—		(267,115)
Treasury stock issued under stock purchase plans	—	—		—		—		—		(9)	2,350		2,350		—		2,350
Balance at March 31, 2023	42,919	$	4,292	$	537,773	$	3,832,849	$	(23,405)	20,126	$	(1,262,004)	$	3,089,505	$	135	$	3,089,640
Balance at June 30, 2023	42,923	$	4,292	$	546,334	$	3,940,616	$	(5,051)	20,126	$	(1,261,992)	$	3,224,199	$	135	$	3,224,334
Net income	—	—		—		285,267		—		—	—		285,267		—		285,267
Stock-based compensation expense	—	—		35,016		—		—		—	—		35,016		—		35,016
Tax withholdings on restricted share vestings	114	12		(19,722)		—		—		—	—		(19,710)		—		(19,710)
Other comprehensive loss, net of tax	—	—		—		—		(7,672)		—	—		(7,672)		—		(7,672)
Repurchases of common stock	—	—		51,097		—		—		641	(211,168)		(160,071)		—		(160,071)
Treasury stock issued under stock purchase plans	—	—		365		—		—		(27)	7,835		8,200		—		8,200
Balance at March 31, 2024	43,037	$	4,304	$	613,090	$	4,225,883	$	(12,723)	20,740	$	(1,465,325)	$	3,365,229	$	135	$	3,365,364
Balance at June 30, 2022	42,820	$	4,282	$	571,650	$	3,555,881	$	(31,076)	19,404	$	(1,047,329)	$	3,053,408	$	135	$	3,053,543
Net income	—	—		—		276,968		—		—	—		276,968		—		276,968
Stock-based compensation expense	—	—		30,564		—		—		—	—		30,564		—		30,564
Tax withholdings on restricted share vestings	99	10		(14,091)		—		—		—	—		(14,081)		—		(14,081)
Other comprehensive income, net of tax	—	—		—		—		7,671		—	—		7,671		—		7,671
Repurchases of common stock	—	—		(50,414)		—		—		750	(221,987)		(272,401)		—		(272,401)
Treasury stock issued under stock purchase plans	—	—		64		—		—		(28)	7,312		7,376		—		7,376
Balance at March 31, 2023	42,919	$	4,292	$	537,773	$	3,832,849	$	(23,405)	20,126	$	(1,262,004)	$	3,089,505	$	135	$	3,089,640

See Notes to Unaudited Condensed Consolidated Financial Statements

7

CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CACI International Inc and subsidiaries (CACI or the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and include the assets, liabilities, results of operations, comprehensive income and cash flows for the Company, including its subsidiaries and ventures that are majority-owned or otherwise controlled by the Company. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated in consolidation.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The fair value of the Company’s debt outstanding as of March 31, 2024 under its bank credit facility approximates its carrying value. The fair value of the Company’s debt under its bank credit facility was estimated using Level 2 inputs based on market data of companies with a corporate rating similar to CACI’s that have recently priced credit facilities.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the periods presented. It is suggested that these unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest annual report to the SEC on Form 10-K for the year ended June 30, 2023. The results of operations for the three and nine months ended March 31, 2024 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

Note 2 – Recent Accounting Pronouncements

Accounting Standards Updates Issued but Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures, which requires disclosure of significant segment expenses and other segment items in annual and interim periods. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impacts of the new standard.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about an entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and should be applied prospectively. Retrospective application is permitted. We are currently evaluating the impacts of the new standard.

Accounting Standards Updates Adopted

There have been no recently adopted accounting pronouncements that are material to the Company's consolidated financial statements.

Note 3 – Acquisition

During the third quarter of fiscal 2024, CACI completed the acquisition of a company specializing in modern human capital management, business systems, and mission solutions for the intelligence community. The purchase consideration was approximately $67.2 million, net of cash acquired, which includes initial cash payments and deferred consideration. The Company preliminarily recognized fair values of the assets acquired and liabilities assumed and allocated $34.6 million to goodwill and $33.7 million to intangible assets. At March 31, 2024, the Company had not finalized the determination of fair values allocated to assets and liabilities.

During the second quarter of fiscal 2024, CACI Limited completed the acquisition of a digital transformation business in the United Kingdom that provides user experience, software development and digital optimization expertise to government and commercial organizations. The purchase consideration was approximately $25.2 million, net of cash acquired, which includes initial cash payments, deferred consideration, and estimated contingent consideration. The Company preliminarily recognized fair values of the assets acquired and liabilities assumed and allocated $19.9 million to goodwill and $3.6 million to intangible assets. At March 31, 2024, the Company had not finalized the determination of fair values allocated to assets and liabilities.

8

Note 4 – Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the nine months ended March 31, 2024 are as follows (in thousands):

	Domestic		International		Total
Balance at June 30, 2023	$	3,940,064	$	144,641	$	4,084,705
Goodwill acquired (1)	34,596		19,238		53,834
Foreign currency translation	(318)		229		(89)
Balance at March 31, 2024	$	3,974,342	$	164,108	$	4,138,450

__________________________________________________

(1)Includes goodwill initially allocated to new business combinations as well as measurement period adjustments, when applicable. The final purchase price allocations for our fiscal 2024 and 2023 acquisitions remain open as of March 31, 2024.

There were no impairments of goodwill during the periods presented.

Intangible Assets

Intangible assets consisted of the following (in thousands):

	March 31, 2024						June 30, 2023
	Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Customer contracts and related customer relationships	$	692,925	$	(342,974)	$	349,951	$	655,877	$	(313,745)	$	342,132
Acquired technologies	271,282		(131,229)		140,053		277,180		(111,477)		165,703
Total intangible assets	$	964,207	$	(474,203)	$	490,004	$	933,057	$	(425,222)	$	507,835

Amortization expense related to intangible assets was $18.4 million and $55.1 million for the three and nine months ended March 31, 2024, respectively, and $18.6 million and $56.8 million for the three and nine months ended March 31, 2023, respectively.

Note 5 – Revenues and Contract Balances

Disaggregation of Revenues

The Company disaggregates revenues by contract type, customer type, prime vs. subcontractor, and whether the solution provided is primarily Expertise or Technology. These categories represent how the nature, amount, timing, and uncertainty of revenues and cash flows are affected.

Disaggregated revenues by contract type were as follows (in thousands):

	Three Months Ended March 31, 2024						Nine Months Ended March 31, 2024
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	1,174,219	$	—	$	1,174,219	$	3,411,128	$	—	$	3,411,128
Fixed-price	484,980		36,007		520,987		1,437,282		105,326		1,542,608
Time-and-materials	218,787		23,463		242,250		604,752		63,049		667,801
Total	$	1,877,986	$	59,470	$	1,937,456	$	5,453,162	$	168,375	$	5,621,537

	Three Months Ended March 31, 2023						Nine Months Ended March 31, 2023
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	1,008,688	$	—	$	1,008,688	$	2,896,778	$	—	$	2,896,778
Fixed-price	494,095		35,691		529,786		1,420,858		100,057		1,520,915
Time-and-materials	191,696		14,100		205,796		540,913		40,839		581,752
Total	$	1,694,479	$	49,791	$	1,744,270	$	4,858,549	$	140,896	$	4,999,445

9

Disaggregated revenues by customer type were as follows (in thousands):

	Three Months Ended March 31, 2024						Nine Months Ended March 31, 2024
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,452,264	$	—	$	1,452,264	$	4,163,079	$	—	$	4,163,079
Federal civilian agencies	381,214		—		381,214		1,178,500		—		1,178,500
Commercial and other	44,508		59,470		103,978		111,583		168,375		279,958
Total	$	1,877,986	$	59,470	$	1,937,456	$	5,453,162	$	168,375	$	5,621,537

	Three Months Ended March 31, 2023						Nine Months Ended March 31, 2023
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,298,700	$	—	$	1,298,700	$	3,554,080	$	—	$	3,554,080
Federal civilian agencies	355,612		—		355,612		1,179,467		—		1,179,467
Commercial and other	40,167		49,791		89,958		125,002		140,896		265,898
Total	$	1,694,479	$	49,791	$	1,744,270	$	4,858,549	$	140,896	$	4,999,445

Disaggregated revenues by prime vs. subcontractor were as follows (in thousands):

	Three Months Ended March 31, 2024						Nine Months Ended March 31, 2024
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,689,140	$	52,637	$	1,741,777	$	4,878,820	$	148,696	$	5,027,516
Subcontractor	188,846		6,833		195,679		574,342		19,679		594,021
Total	$	1,877,986	$	59,470	$	1,937,456	$	5,453,162	$	168,375	$	5,621,537

	Three Months Ended March 31, 2023						Nine Months Ended March 31, 2023
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,511,758	$	44,975	$	1,556,733	$	4,339,579	$	128,303	$	4,467,882
Subcontractor	182,721		4,816		187,537		518,970		12,593		531,563
Total	$	1,694,479	$	49,791	$	1,744,270	$	4,858,549	$	140,896	$	4,999,445

Disaggregated revenues by expertise or technology were as follows (in thousands):

	Three Months Ended March 31, 2024						Nine Months Ended March 31, 2024
	Domestic		International		Total		Domestic		International		Total
Expertise	$	895,791	$	21,164	$	916,955	$	2,583,634	$	60,956	$	2,644,590
Technology	982,195		38,306		1,020,501		2,869,528		107,419		2,976,947
Total	$	1,877,986	$	59,470	$	1,937,456	$	5,453,162	$	168,375	$	5,621,537

	Three Months Ended March 31, 2023						Nine Months Ended March 31, 2023
	Domestic		International		Total		Domestic		International		Total
Expertise	$	793,993	$	18,307	$	812,300	$	2,237,146	$	50,977	$	2,288,123
Technology	900,486		31,484		931,970		2,621,403		89,919		2,711,322
Total	$	1,694,479	$	49,791	$	1,744,270	$	4,858,549	$	140,896	$	4,999,445

Changes in Estimates

Aggregate net changes in estimates for the three and nine months ended March 31, 2024 reflected an increase to income before income taxes of $7.5 million ($0.25 per diluted share) and $24.5 million ($0.81 per diluted share), respectively, compared with $5.3 million ($0.17 per diluted share) and $16.8 million ($0.53 per diluted share), for the three and nine months ended March 31, 2023. The Company uses its statutory tax rate when calculating the impact to diluted earnings per share.

Revenues recognized from previously satisfied performance obligations were not material for the three and nine months ended March 31, 2024 and 2023, respectively. The change in revenues recognized from previously satisfied performance obligations generally relates to final true-up adjustments for estimated award or incentive fees in the period in which the customer’s final performance score was received or when it can be determined that more objective, contractually-defined criteria have been fully satisfied.

10

Remaining Performance Obligations

As of March 31, 2024, the Company had $9.7 billion of remaining performance obligations and expects to recognize approximately 46% and 67% as revenue over the next 12 and 24 months, respectively, with the remainder to be recognized thereafter.

Contract Balances

Contract balances consisted of the following (in thousands):

Description of Contract Related Balance	Financial Statement Classification	March 31, 2024		June 30, 2023
Billed and billable receivables	Accounts receivable, net	$	838,927	$	763,547
Contract assets – current unbilled receivables	Accounts receivable, net	174,750		131,399
Contract assets – current costs to obtain	Prepaid expenses and other current assets	5,898		5,163
Contract assets – noncurrent unbilled receivables	Accounts receivable, long-term	12,557		11,857
Contract assets – noncurrent costs to obtain	Other long-term assets	11,296		8,294
Contract liabilities – current deferred revenue and other contract liabilities	Other accrued expenses and current liabilities	(134,355)		(138,469)
Contract liabilities – noncurrent deferred revenue and other contract liabilities	Other long-term liabilities	(2,999)		(5,522)

During the three and nine months ended March 31, 2024, we recognized $23.0 million and $117.4 million of revenues, respectively, compared with $10.8 million and $81.8 million of revenues for the three and nine months ended March 31, 2023, that was included in a previously recorded contract liability as of the beginning of the period.

Note 6 – Inventories

Inventories consisted of the following (in thousands):

	March 31, 2024		June 30, 2023
Materials, purchased parts and supplies	$	84,632	$	78,691
Work in process	15,002		21,894
Finished goods	33,051		30,006
Total	$	132,685	$	130,591

Inventories are stated at the lower of cost (average cost or first-in, first-out) or net realizable value and are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets.

Note 7 – Sales of Receivables

On December 20, 2023, the Company amended its Master Accounts Receivable Purchase Agreement (MARPA) with MUFG Bank, Ltd. (Purchaser), for the sale of certain designated eligible U.S. government receivables. The amendment extended the term of the MARPA to December 20, 2024. Under the MARPA, the Company can sell eligible receivables, including certain billed and unbilled receivables up to a maximum amount of $250.0 million. The Company’s receivables are sold under the MARPA without recourse for any U.S. government credit risk.

The Company accounts for receivable transfers under the MARPA as sales under ASC 860, Transfers and Servicing, and derecognizes the sold receivables from its balance sheets. The fair value of the sold receivables approximated their book value due to their short-term nature.

The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore no servicing asset or liability related to these receivables was recognized as of March 31, 2024. Proceeds from the sold receivables are reflected in operating cash flows on the statement of cash flows.

11

MARPA activity consisted of the following (in thousands):

	As of and for the Nine Months Ended March 31,
	2024		2023
Beginning balance:	$	200,000	$	157,785
Sales of receivables	2,423,064		2,150,891
Cash collections	(2,373,064)		(2,135,986)
Outstanding balance sold to Purchaser: (1)	250,000		172,690
Cash collected, not remitted to Purchaser (2)	(85,120)		(47,680)
Remaining sold receivables	$	164,880	$	125,010

__________________________________________________

(1)For the nine months ended March 31, 2024 and 2023, the Company recorded a net cash inflow of $50.0 million and a net cash inflow of $14.9 million in its cash flows from operating activities, respectively, from sold receivables. MARPA cash flows are calculated as the change in the outstanding balance during the fiscal year.

(2)Includes the cash collected on behalf of but not yet remitted to Purchaser as of March 31, 2024 and 2023. This balance is included in other accrued expenses and current liabilities as of the balance sheet date.

Note 8 – Debt

Long-term debt consisted of the following (in thousands):

	March 31, 2024		June 30, 2023
Bank credit facility – term loans	$	1,148,438	$	1,179,063
Bank credit facility – revolver loans	550,000		525,000
Principal amount of long-term debt	1,698,438		1,704,063
Less unamortized discounts and debt issuance costs	(6,038)		(7,682)
Total long-term debt	1,692,400		1,696,381
Less current portion	(61,250)		(45,938)
Long-term debt, net of current portion	$	1,631,150	$	1,650,443

Bank Credit Facility

On December 13, 2021, the Company amended its credit facility (the Credit Facility) primarily to extend the maturity date, increase borrowing capacity, and improve pricing. As amended, the Company’s $3,200.0 million Credit Facility consists of a $1,975.0 million revolving credit facility (the Revolving Facility) and a $1,225.0 million term loan (the Term Loan). The Revolving Facility has subfacilities of $100.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit.

The Revolving Facility is a secured facility that permits continuously renewable borrowings of up to $1,975.0 million. As of March 31, 2024, the Company had $550.0 million outstanding under the Revolving Facility and no borrowings on the swing line. The Company pays a quarterly facility fee for the unused portion of the Revolving Facility.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $7.7 million through December 31, 2023 and $15.3 million thereafter until the balance is due in full on December 13, 2026. As of March 31, 2024, the Company had $1,148.4 million outstanding under the Term Loan.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at the Company’s option, equal a base rate or a Secured Overnight Financing Rate (SOFR) rate plus, in each case, an applicable margin based upon the Company’s consolidated total net leverage ratio. As of March 31, 2024, the effective interest rate, including the impact of the Company’s floating-to-fixed interest rate swap agreements and excluding the effect of amortization of debt financing costs, for the outstanding borrowings under the Credit Facility was 4.83%.

The Credit Facility requires the Company to comply with certain financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting the Company’s ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. As of March 31, 2024, the Company was in compliance with all of the financial covenants. A majority of the Company’s assets serve as collateral under the Credit Facility.

All debt issuance costs are being amortized from the date incurred to the expiration date of the Credit Facility.

12

Cash Flow Hedges

The Company periodically uses derivative financial instruments as part of a strategy to manage exposure to market risks associated with interest rate fluctuations. The Company has entered into several floating-to-fixed interest rate swap agreements for an aggregate notional amount of $1,100.0 million which hedge a portion of the Company’s floating rate indebtedness. The swaps mature at various dates through 2028. The Company has designated the swaps as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The interest rate swap agreements are highly correlated to the changes in interest rates to which the Company is exposed. Realized gains and losses in connection with each required interest payment are reclassified from accumulated other comprehensive income or loss to interest expense. The Company does not hold or issue derivative financial instruments for trading purposes.

The effect of derivative instruments in the consolidated statements of operations and accumulated other comprehensive loss for the three and nine months ended March 31, 2024 and 2023 is as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Gain (loss) recognized in other comprehensive income	$	14,252	$	(5,906)	$	14,130	$	10,584
Amounts reclassified to earnings from accumulated other comprehensive loss	(6,879)		(4,095)		(20,547)		(6,572)
Net current period other comprehensive income (loss)	$	7,373	$	(10,001)	$	(6,417)	$	4,012

Note 9 – Legal Proceedings and Other Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims, lawsuits, and administrative proceedings arising in the normal course of business, none of which, based on current information, are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Government Contracting

Payments to the Company on cost-plus-fee and time-and-materials contracts are subject to adjustment upon audit by the Defense Contract Audit Agency (DCAA) and other government agencies that do not utilize DCAA’s services. The DCAA has completed audits of the Company’s annual incurred cost proposals through fiscal year 2022. The Company is still negotiating the results of prior years’ audits with the respective cognizant contracting officers and believes its reserves for such are adequate. Adjustments that may result from these audits and the audits not yet started are not expected to have a material effect on the Company’s financial position, results of operations, or cash flows and the Company has accrued its best estimate of potential disallowances. Additionally, the DCAA continually reviews the cost accounting and other practices of government contractors, including the Company. In the course of those reviews, cost accounting and other issues may be identified, discussed and settled.

Note 10 – Earnings Per Share

Earnings per share and the weighted-average number of diluted shares are computed as follows (in thousands, except per share data):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Net income	$	115,350	$	100,742	$	285,267	$	276,968
Weighted-average number of basic shares outstanding during the period	22,292		23,055		22,407		23,329
Dilutive effect of RSUs after application of treasury stock method	186		222		186		217
Weighted-average number of diluted shares outstanding during the period	22,478		23,277		22,593		23,546
Basic earnings per share	$	5.17	$	4.37	$	12.73	$	11.87
Diluted earnings per share	$	5.13	$	4.33	$	12.63	$	11.76

13

Share Repurchases

On January 26, 2023, the Company’s Board of Directors authorized a share repurchase program of up to $750.0 million of the Company’s common stock (the "2023 Repurchase Program").

On January 30, 2023, CACI entered into an Accelerated Share Repurchase (ASR) Agreement with Citibank, N.A (Citibank). Under the ASR Agreement, we paid $250.0 million to Citibank and received an initial delivery of approximately 0.7 million shares of our common stock, which became treasury shares. On August 4, 2023, the ASR was completed and an additional 0.1 million shares of common stock were received which became treasury shares. In total, 0.8 million shares were repurchased at an average price per share of $303.57.

In addition to the ASR, during the nine months ended March 31, 2024, CACI repurchased 0.5 million shares of its outstanding common stock for $150.0 million on the open market at an average share price of $318.99 including commissions paid. The total remaining authorization for future common share repurchases under the 2023 Repurchase Program was $337.3 million as of March 31, 2024.

Note 11 – Income Taxes

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company is currently under examination by the Internal Revenue Service for fiscal years 2017 through 2021 and a state jurisdiction for fiscal years 2019 and 2020. The Company does not expect resolution of these examinations to have a material impact on its results of operations, financial condition, or cash flows.

During fiscal year 2023, a provision of the Tax Cuts and Jobs Act of 2017 (TCJA) went into effect which eliminated the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to capitalize and amortize such costs over five years. Based upon our interpretation of the law as currently enacted, we estimate that the fiscal 2024 impact will result in increases of $75.3 million to both our income taxes payable and net deferred tax assets. We also estimate a fiscal 2024 increase to our liability for unrecognized tax benefits of $72.9 million, with a corresponding increase to net deferred tax assets. Although it is possible that Congress amends this provision, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision. For the nine months ended March 31, 2024, the Company recognized a $50.3 million increase in our liability for unrecognized tax benefits and a $51.9 million increase in income taxes payable, with corresponding increases to net deferred tax assets.

The Company’s effective income tax rate was 24.9% and 23.2% for the three and nine months ended March 31, 2024, respectively, and 23.4% and 22.8% for the three and nine months ended March 31, 2023, respectively. The effective tax rates for the three and nine months ended March 31, 2024, and 2023 were favorably impacted by research and development tax credits, partially offset by state income taxes.

Note 12 – Business Segments

The Company reports operating results and financial data in two segments: domestic operations and international operations. Domestic operations provide Expertise and Technology primarily to U.S. federal government agencies. International operations provide Expertise and Technology primarily to international government and commercial customers.

The Company evaluates the performance of its operating segments based on net income. Summarized financial information for the Company’s reportable segments is as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Revenues:
Domestic	$	1,877,986	$	1,694,479	$	5,453,162	$	4,858,549
International	59,470		49,791		168,375		140,896
Total revenues	$	1,937,456	$	1,744,270	$	5,621,537	$	4,999,445
Net income:
Domestic	$	106,598	$	93,383	$	257,901	$	254,298
International	8,752		7,359		27,366		22,670
Total net income	$	115,350	$	100,742	$	285,267	$	276,968

14

Note 13 – Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and categorizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable, either directly or indirectly, or quoted prices that are not active (Level 2); and unobservable inputs in which there is little or no market data which requires development of assumptions that market participants would use in pricing the asset or liability (Level 3).

The financial instruments measured at fair value on a recurring basis consist of the following (in thousands):

Description of Financial Instrument	Financial Statement Classification	Fair Value Hierarchy	March 31, 2024		June 30, 2023
			Fair Value
Contingent consideration	Other long-term liabilities	Level 3	$	(10,691)	$	—
Interest rate swap agreements	Prepaid expenses and other current assets	Level 2	$	777	$	17
Interest rate swap agreements	Other long-term assets	Level 2	$	33,909	$	43,283

The Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

The Company recognized contingent consideration liabilities in connection with its current year acquisition, representing potential earnout payments and other contingent payments. The fair values of these liabilities were determined using a valuation model which included an assessment of the most likely outcome, assumptions related to projected earnings of the acquired company and the application of a discount rate when applicable. Fair value of contingent consideration is reassessed quarterly, including an analysis of the significant inputs used in the evaluation, as well as the accretion of the discount. Changes are reflected within indirect costs and selling expenses.

15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations is provided to enhance the understanding of, and should be read together with, our unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q.

Information Relating to Forward-Looking Statements

There are statements made herein that do not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to risk factors that could cause actual results to be materially different from anticipated results. These risk factors include, but are not limited to, the following:

•our reliance on U.S. government contracts, which includes general risk around the government contract procurement process (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks;

•significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns;

•legislation that amends or changes discretionary spending levels or budget priorities, such as for homeland security or to address global pandemics like COVID-19;

•legal, regulatory, and political change from successive presidential administrations that could result in economic uncertainty;

•changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy, including the impact of global pandemics like COVID-19;

•the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight;

•competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances);

•failure to achieve contract awards in connection with re-competes for present business and/or competition for new business;

•regional and national economic conditions in the United States and globally, including but not limited to: terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and market speculation regarding our continued independence;

•our ability to meet contractual performance obligations, including technologically complex obligations dependent on factors not wholly within our control;

•limited access to certain facilities required for us to perform our work, including during a global pandemic like COVID-19;

•changes in tax law, the interpretation of associated rules and regulations, or any other events impacting our effective tax rate;

•changes in technology;

•the potential impact of the announcement or consummation of a proposed transaction and our ability to successfully integrate the operations of our recent and any future acquisitions;

•our ability to achieve the objectives of near term or long-term business plans; and

•the effects of health epidemics, pandemics and similar outbreaks may have material adverse effects on our business, financial position, results of operations and/or cash flows.

The above non-inclusive list of risk factors may impact the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, other risk factors include, but are not limited to, those described in “Item 1A. Risk Factors” within our Annual Report on Form 10-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are as of the date of its filing.

Overview

The Company provides distinctive Expertise and differentiated Technology to customers in support of national security and government modernization.

•Expertise – We deliver talent with the specific technical and functional knowledge to support internal agency operations. Examples include functional software development expertise, data and business analysis, and IT operations support. We deliver talent with technical and domain knowledge to support the execution of an agency’s mission. Examples include engineering expertise such as naval architecture, marine engineering, and life cycle support; and mission support expertise such as intelligence and special operations support, and network and exploitation analysis.

16

•Technology – CACI provides software development at scale using open modern architectures, DevSecOps, and agile methodologies; and advanced data platforms, data operations and analyst-centric analytics including application of Artificial Intelligence and multi-source analysis. We provide Network and IT modernization; Commercial Solutions for Classified (CSfC); the customization, implementation, and maintenance of commercial-off-the-shelf (COTS) and enterprise resource planning (ERP) systems including financial, human capital, and supply chain management systems; and cyber security active defense and zero trust architectures. We develop and deploy multi-domain offerings for signals intelligence, resilient communications, free space optical communications, electronic warfare including Counter-UAS, cyber operations, and Radio Frequency (RF) spectrum awareness, agility and usage. CACI invests ahead of customer need with research and development to generate unique intellectual property and differentiated technology addressing critical national security and government modernization needs.

Budgetary Environment

We carefully follow federal budget, legislative and contracting trends and activities and evolve our strategies to take these into consideration. For the government fiscal year (GFY) ending September 30, 2023 (GFY23), defense and nondefense funding levels represented increases of approximately 10% and 6%, respectively, over GFY22 enacted levels. On June 3, 2023, the President signed into law legislation that suspended the federal debt limit until January 2025 and capped discretionary spending in GFY24 and GFY25. Specifically, GFY24 defense spending is capped at $886 billion, an increase of 3% and in-line with the President’s GFY24 budget request, and GFY24 nondefense spending is capped at levels similar to GFY22 (though after various adjustments would essentially be flat with GFY23 levels). For GFY25, discretionary spending growth (both defense and nondefense) is capped at 1%. On March 23, 2024, the President signed into law an appropriations bill that funds the federal government for GFY24, generally consistent with the terms set forth in the debt limit legislation signed in June 2023. Earlier in March, the President released his GFY25 budget request that was also generally consistent with the terms set forth in the debt limit legislation signed in June 2023. While future levels of defense and nondefense spending are difficult to project, particularly given ongoing budget negotiations in Congress, we believe that there continues to be bipartisan support for defense and national security-related spending, particularly given the heightened current global threat environment.

While we view the budget environment as constructive and believe there is bipartisan support for continued investment in the areas of defense and national security, it is uncertain when in any particular GFY that appropriations bills will be passed. During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a continuing resolution (CR), a temporary measure allowing the government to continue operations at prior year funding levels.

Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. When a CR expires, unless appropriations bills have been passed by Congress and signed by the President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity. Were a shutdown to occur, it could have adverse consequences to our business and our industry. We continuously review our operations in an attempt to identify programs potentially at risk from CRs and shutdowns so that we can consider appropriate contingency plans.

Market Environment

We provide Expertise and Technology to government customers. We believe that the total addressable market for our offerings is sufficient to support the Company's plans and is expected to continue to grow over the next several years. Approximately 74% of our revenue comes from defense-related customers, including those in the Intelligence Community (IC), with additional revenue coming from non-defense IC, homeland security, and other federal civilian customers.

We continue to align the Company’s capabilities with well-funded budget priorities and take steps to maintain a competitive cost structure in line with our expectations of future business opportunities. In light of these actions, as well as the budgetary environment discussed above, we believe we are well positioned to continue to win new business in our large addressable market. We believe that the following trends will influence the USG’s spending in our addressable market:

•A stable-to-higher USG budget environment, particularly in defense and intelligence-related areas;

•Increased focus on cyber, space, and the electromagnetic spectrum as key domains for National Security;

•Increased spend on network and application modernization and enhancements to cyber security posture;

•Increased investments in advanced technologies (e.g., Artificial Intelligence), particularly software-based technologies;

•Increasing focus on near-peer competitors and other nation state threats;

•Continued focus on counterterrorism, counterintelligence, and counter proliferation as key U.S. security concerns; and

•Increased demand for innovation and speed of delivery.

17

We believe that our customers’ use of lowest price/technically acceptable (LPTA) procurements, which contributed to pricing pressures in past years, has moderated, though price still remains an important factor in procurements. We also continue to see protests of major contract awards and delays in USG procurement activities. In addition, many of our federal government contracts require us to employ personnel with security clearances, specific levels of education and specific past work experience. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain and competition for skilled personnel in the information technology services industry is intense. Additional factors that could affect USG spending in our addressable market include changes in set-asides for small businesses, changes in budget priorities, and budgetary priorities limiting or delaying federal government spending in general.

Results of Operations for the Three and Nine Months Ended March 31, 2024 and 2023

The following table provides our results of operations (in thousands):

	Three Months Ended March 31,								Nine Months Ended March 31,
	2024		2023		Change				2024		2023		Change
	Dollars						Percent		Dollars						Percent
Revenues	$	1,937,456	$	1,744,270	$	193,186	11.1	%	$	5,621,537	$	4,999,445	$	622,092	12.4	%
Costs of revenues:
Direct costs	1,290,903		1,143,781		147,122		12.9		3,819,072		3,293,867		525,205		15.9
Indirect costs and selling expenses	430,134		410,235		19,899		4.9		1,244,122		1,180,619		63,503		5.4
Depreciation and amortization	35,115		35,220		(105)		(0.3)		106,385		106,255		130		0.1
Total costs of revenues	1,756,152		1,589,236		166,916		10.5		5,169,579		4,580,741		588,838		12.9
Income from operations	181,304		155,034		26,270		16.9		451,958		418,704		33,254		7.9
Interest expense and other, net	27,668		23,570		4,098		17.4		80,758		59,705		21,053		35.3
Income before income taxes	153,636		131,464		22,172		16.9		371,200		358,999		12,201		3.4
Income taxes	38,286		30,722		7,564		24.6		85,933		82,031		3,902		4.8
Net income	$	115,350	$	100,742	$	14,608	14.5		$	285,267	$	276,968	$	8,299	3.0

Revenues. The increase in revenues for the three and nine months ended March 31, 2024, as compared to the three and nine months ended March 31, 2023, was primarily attributable to new contract awards and growth on existing programs.

The following table summarizes revenues by customer type with related percentages of revenues for the three and nine months ended March 31, 2024 and 2023, respectively (in thousands):

	Three Months Ended March 31,								Nine Months Ended March 31,
	2024		2023		Change				2024		2023		Change
	Dollars						Percent		Dollars						Percent
Department of Defense	$	1,452,264	$	1,298,700	$	153,564	11.8	%	$	4,163,079	$	3,554,080	$	608,999	17.1	%
Federal Civilian Agencies	381,214		355,612		25,602		7.2		1,178,500		1,179,467		(967)		(0.1)
Commercial and other	103,978		89,958		14,020		15.6		279,958		265,898		14,060		5.3
Total	$	1,937,456	$	1,744,270	$	193,186	11.1	%	$	5,621,537	$	4,999,445	$	622,092	12.4	%

•DoD revenues include Expertise and Technology provided to various Department of Defense customers.

•Federal civilian agencies’ revenues primarily include Expertise and Technology provided to non-DoD agencies and departments of the U.S. federal government, including intelligence agencies and Departments of Homeland Security, Justice, Agriculture, Health and Human Services, and State.

•Commercial and other revenues primarily include Expertise and Technology provided to U.S. state and local governments, commercial customers, and certain foreign governments and agencies through our International reportable segment.

Direct Costs. The increase in direct costs for the three and nine months ended March 31, 2024, as compared to the prior year period, was primarily attributable to direct labor and subcontractor costs from organic growth on existing programs and higher materials costs. As a percentage of revenue, direct costs were 66.6% and 67.9% for the three and nine months ended March 31, 2024, respectively, and 65.6% and 65.9% for the three and nine months ended March 31, 2023, respectively. Direct costs include direct labor, subcontractor costs, materials, and other direct costs.

Indirect Costs and Selling Expenses. As a percentage of revenue, indirect costs and selling expenses were 22.2% and 22.1% for the three and nine months ended March 31, 2024, respectively, and 23.5% and 23.6% for the three and nine months ended March 31, 2023, respectively, driven by cost efficiencies across the Company. The increase in indirect costs and selling expenses for the three and nine months ended March 31, 2024, as compared to the prior year periods, was primarily attributable to increased expenses due to a larger workforce, resulting in increased fringe benefits, as well as an increase in professional services.

18

Depreciation and Amortization. Depreciation and amortization for the three and nine months ended March 31, 2024 was consistent with the prior year periods.

Interest Expense and Other, Net. The increase in interest expense and other, net for the three and nine months ended March 31, 2024, as compared to the prior year period, was primarily attributable to higher interest rates and higher outstanding debt balances.

Income Tax Expense. The Company’s effective income tax rate was 24.9% and 23.2% for the three and nine months ended March 31, 2024, respectively, and 23.4% and 22.8% for the three and nine months ended March 31, 2023, respectively. The effective tax rates for the three and nine months ended March 31, 2024, and 2023 were favorably impacted by research and development tax credits, partially offset by state income taxes.

Contract Backlog

The Company’s backlog represents value on existing contracts that has the potential to be recognized into revenues as work is performed. The Company includes unexercised option years in its backlog and excludes the value of task orders that may be awarded under multiple award indefinite delivery/indefinite quantity (“IDIQ”) vehicles until such task orders are issued.

The Company’s backlog as of period end is either funded or unfunded:

•Funded backlog represents contract value for which funding has been appropriated less revenues previously recognized on these contracts.

•Unfunded backlog represents estimated values that have the potential to be recognized into revenue from executed contracts for which funding has not been appropriated and unexercised priced contract options.

As of March 31, 2024, the Company had total backlog of $28.6 billion, compared with $25.3 billion a year ago, an increase of 13.0%. Funded backlog as of March 31, 2024 was $3.2 billion. The total backlog consists of remaining performance obligations (see Note 5) plus unexercised options.

There is no assurance that all funded or potential contract value will result in revenues being recognized. The Company continues to monitor backlog as it is subject to change from execution of new contracts, contract modifications or extensions, government deobligations, early terminations, or other factors. Based on this analysis, an adjustment to the period end balance may be required.

Liquidity and Capital Resources

Existing cash and cash equivalents and cash generated by operations are our primary sources of liquidity, as well as sales of receivables under our MARPA (as defined and discussed in Note 7) and available borrowings under our Credit Facility (as defined in Note 8).

The Company has a $3,200.0 million Credit Facility, which consists of a $1,975.0 million Revolving Facility and a $1,225.0 million Term Loan. The Revolving Facility is a secured facility that permits continuously renewable borrowings and has subfacilities of $100.0 million for same-day swing line borrowings and $25.0 million for stand-by letters of credit. As of March 31, 2024, we had $550.0 million outstanding under the Revolving Facility and no borrowings on the swing line.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $7.7 million through December 31, 2023 and $15.3 million thereafter until the balance is due in full on December 13, 2026. As of March 31, 2024, $1,148.4 million was outstanding under the Term Loan.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at our option, equal a base rate or a SOFR rate plus, in each case, an applicable margin based upon our consolidated total net leverage ratio.

The Credit Facility requires us to comply with certain financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting our ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. Since the inception of the Credit Facility, we have been in compliance with all of the financial covenants. A majority of our assets serve as collateral under the Credit Facility.

During fiscal year 2023, a provision of the TCJA went into effect which eliminated the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to capitalize and amortize such costs over five years. This provision is expected to decrease fiscal year 2024 cash flows from operations by $75.3 million. Although it is possible that Congress amends this provision, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision. The future impact of this provision will depend on if and when this provision is deferred, modified, or repealed by Congress, including if retroactively, any guidance issued by the Treasury Department regarding the identification of appropriate costs for capitalization, and the amount of future research and development expenses paid or incurred (among other factors).

19

A summary of the change in cash and cash equivalents is presented below (in thousands):

	Nine Months Ended March 31,
	2024		2023
Net cash provided by operating activities	$	340,123	$	235,954
Net cash used in investing activities	(120,694)