Paul Cofoni can look back on his first year as chief executive officer at CACI International Inc. with a sense of accomplishment, highlighted by the company’s four acquisitions in 10 months.
The government contractor, based in Arlington, Va., recorded $1.3 billion in prime contracting revenue in 2007 compared to about $1 billion the previous year. This year, CACI lands at No. 17 on the Top 100 list.
CACI’s acquisitions of Dragon Development Corp., Athena Innovative Solutions Inc., Wexford Group International and the Institute for Quality Management Inc. added about $260 million in revenue and between 800 and 900 new employees in 2007, Cofoni said.
CACI’s business plans for the four companies are being successfully implemented, he said. “We’re actually seeing that they’re beating projections in terms of financial performance. That’s really rewarding because we were very careful in looking for companies that would contribute higher revenue growth and earnings growth.”
Cofoni said attracting and retaining qualified information technology professionals, especially those with high-level security clearances, has been a struggle during the past several years. “But in the last year, we’ve turned the corner on that, and we had our best-ever hiring year, with a net [organic] growth of almost 800 people.”
CACI will continue to seek annual growth rates of 15 percent to 20 percent and make additional acquisitions in the areas of intelligence and security services, he said, although those companies are expensive because they are in high demand.
“That’s where our last four acquisitions have been,” Cofoni added. “It is the primary focus area for us.”
“Intelligence is a good market to be in,” said Philip Finnegan, director of corporate analysis at Teal Group Corp., a provider of aerospace and defense industry market intelligence in Fairfax, Va.
“The customer is very loyal to companies it employs,” he said. “Intelligence agencies don’t like to change the companies they are dealing with. That creates a high barrier of entry for competitors.” And that is good for profit margins, he added.
“We’re quite pleased to see that the company has a well-defined initiative to increase its intelligence exposure,” said Michael Lewis, senior vice president at BB&T Capital Markets Inc. “We’ve essentially seen it double over the past two years, and I anticipate that we will continue to see the acquisition strategy focused more in that area than elsewhere.”
“CACI’s growth strategy appears sound, and they’ve done a really good job of hitting their revenue targets in the past and making good acquisitions,” Finnegan said.
The company has also set its sights on expanding its services into the health care, energy and environmental markets, but not immediately. “We’re continuing to look at those three areas,” Cofoni said. But until there are strong national policies to support and expand those areas, “it’s hard to start implementing things.” Lewis said he is also “pleasantly surprised that the company has been very successful in holding on to current contracts and when they are up for re-compete seeing, most importantly, an expansion in scope” of services.
He said CACI’s management team has a well-defined strategy to grow into a larger IT services firm. “Over the last two years, there have been some significant speed bumps that have gotten in the way,” Lewis said, which have caused the stock price to decline. “However, I believe that Paul has corrected these issues.”
