UPDATE 1-CACI sees continued growth despite U.S. budget climate

Thu Nov 1, 2012 4:02pm EDT

* Shares up over 7 pct

* Company posted record revenues in Q1 fiscal 2013

By Andrea Shalal-Esa

WASHINGTON, Nov 1 (Reuters) - CACI International Inc's shares surged more than 7 percent on Thursday after the U.S. government contractor said it expects to continue to grow in its current fiscal year despite the challenging U.S. budget environment.

Chief Executive Dan Allen told Reuters the company, a provider of information services to the government, saw growth in eight of its 10 main business sectors and expected higher revenues in the two remaining areas in the second half of the company's fiscal year, which ends June 30.

CACI, which reported fiscal first-quarter results after the market close on Wednesday, was on track to meet its full-year targets, including earnings per share of $6.64 to $6.93 on revenue of $3.8 billion to $4 billion, he said.

"Even in a difficult budget environment, we're going to grow," Allen told Reuters. "We want to grow aggressively."

He said the company still aimed to double its size over the next five years through expansion in its key markets and targeted acquisitions.

"That's kind of the mark that we have out there. That's been the mindset of the organization over time," Allen said, although he acknowledged the challenge became greater as the company became larger.

Allen told analysts earlier on Thursday that CACI was well positioned in 10 markets that either promised high growth or already generated high-volume orders.

He said the company was keeping close tabs on budget decisions in Washington, and he hoped Congress would find a way to avoid billions of dollars in additional defense spending cuts that are due to start taking effect on Jan. 2.

The company, however, did not expect a significant impact on its overall outlook, even if the cuts were to take effect, given that it has a large number of separate contracts - more than 2,100 - with the government.

"We may experience reduced funding on some programs, but we do not expect cancellation of any major programs," he said.

Speaking with Reuters, Allen also said CACI did not expect to have to issue any layoff notices to workers if lawmakers were unable to avert the reductions.

CACI shares provisionally closed up 6.8 percent at $53.88 on the New York Stock Exchange.

Jefferies analyst Jason Kupferberg recommended clients maintain a hold on the stock, because the shares have already appreciated about 10 percent since CACI's initial guidance in June. His price target for the stock is $57.

CACI reported record revenue of $931.2 million in its fiscal first quarter ended Sept. 30, up 2 percent from $912.4 million in the year-earlier quarter, with earnings per share surging 26.6 percent to $1.49 from $1.18, largely due to share repurchases.

Allen said the company's business systems and healthcare information technology sectors both generated double-digit revenue growth in the quarter.

He said the intelligence and command, control and communications sectors - which saw lower revenue as result of the U.S. military drawdown in Afghanistan - were likely to resume modest growth in the second half of the year.

Defensive, offensive and intelligence work in cyberspace would be another high-growth area for the company, Allen said, citing increased concern about cyber attacks on U.S. networks.

CACI also remained interested in targeted mergers and acquisitions, he said, but valuations were not well aligned with the current budget environment and several possible targets had pulled back earlier this year.