CACI International Inc (CACI) 2017 Q1 法說會逐字稿

Welcome to the CACI International Q1 fiscal year 2017 conference call. Today's call is being recorded. At this time all lines are in a listen-only mode. Later we will announce an opportunity for questions and instructions will be given at that time. (Operator Instructions).

A special reminder to our media guests who are listening in; please remember that during the question-and-answer portion of the call, we are only taking questions from the analysts. At this time, I would like to turn the call over to your host, Dave Dragics, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Thanks, Jason, and good morning, ladies and gentlemen. I'm Dave Dragics, Senior Vice President of Investor Relations of CACI international, and we're very pleased that you're able to participate with us today. And as is our practice, we are providing presentation slides; so let's move to slide number two.

Now, about our written and oral disclosures and commentary; there will be statements in this call that do not address historical facts. 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 results. Factors that could cause our actual results to differ materially from those we anticipate are listed at the bottom of the last evening's earning release and are described in the company's Security and Exchange Commission filing. Our Safe Harbor statement is included on this exhibit, and should be incorporated as part of any transcript of this call.

I also like to point out that our presentation today will include discussion of non-GAAP financial measures, and these non-GAAP financial measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. So let's turn to slide number three and to open up our discussion this morning here is Ken Asbury, President and Chief Executive Officer of CACI International. Ken?

Thank you, Dave. And good morning to everyone. Thanks for joining us to discuss CACI International's FY 2017 first quarter results. With me this morning are John Mengucci, our Chief Operating Officer and President of US Operations; Tom Mutryn, our Chief Financial Officer; and Greg Bradford, Chief Executive of CACI Ltd., who is joining us from the UK.

Please turn to slide four. I'm pleased with CACI's strong first quarter 2017 results. We won important new business, including larger, more complex solutions business, which is at the very heart of our long-term strategy. We delivered outstanding customer service and won a number of key and critical recompetes. Our focus on M&A for growth continues to pay off with exceptional financial performance and strategic value from our National Security Solutions acquisition. We could not be more pleased with them joining our team.

Our achievements this quarter reflect the value that CACI solutions and services provide to our government customers. As our nation continues to face a broad spectrum of security threats, our customers increasingly rely on us to support them in responding to both enduring and rapidly emerging challenges to global security. Our first quarter awards demonstrate our success in doing so.d on our current forecast, reiterating our FY 17 guidance it's a prudent decision.

Let's turn to Slide 5, please. While we won contracts in all of our market areas, we received a significant number of awards in Intelligence Systems and Support, Surveillance and Reconnaissance, and Communications. These are all areas in which the government is currently investing to enhance its capabilities and in which CACI is delivering innovation and value to those critical national security missions.

On that note, I'm happy to continue to note that this is the third consecutive quarter we recorded more than $1 billion in awards, adding almost $2 billion awards this quarter. Across that $4.7 billion that we've done the last three quarters in awards, 32% of that are for new business, which puts us in a great position for our work going forward. And that number does not include the recompete win of our OPM work this quarter, which we expect will continue at its current revenue run rate during the next contract period. We are proud to continue supporting OPM as a trusted supplier.

Turning to the market environment, the government is operating under the current continuing resolution until December 9th. A full year of federal budget would provide better visibility and a more stable planning environment for our customers and the entirety of the industry. That said, we remain confident in our long-term goals because of the diversity and resilience of our market-based strategy.

Beginning in FY 2018, we expect to grow revenue organically 1% to 4% above our addressable market. And for the addressable market, we see it expanding at about 1% to 1.5% on a compound annual growth rate over the next five years. In addition, we expect to expand profit margins by ten to 30 basis points annually, as we continue to pursue high-value enduring solution business with the focus on firm fixed price point.

Before I turn the call over to Tom, I want to reiterate the first quarter was a great start to our FY 2017 plan. However, one quarter does not drive the entire year. Our first quarter had some pull aheads and one time events that provided goodness. We have -- but we have additional recompete and new business to win, and we need to see how Congress handles the budget passed December 9th. Our view is that a multiple, short term CR environment would impact procurement activities and likely tamp down awards in funds flow. We hope that that doesn't happen. But based on our current forecast, reiterating our FY 2017 guidance is improving decisions.

Let me ask Tom to share the details of our first quarter financials. Tom?

Thank you, Ken, and good morning, everyone. Let's turn to slide number six. We are off to a strong start for the year. Revenue in the quarter was $1.07 billion and net income was $36.7 million, ahead of our plan and the expectations we spoke about on our August call. The results reflect continued strong operating performance in some positive activities that took place in the quarter.

Our revenue was up 30.5% year-over-year, driven by the $254 million revenue contribution to NSF. In addition, unplanned material purchases late in the quarter added to our revenue, driving the better than expected revenue performance. Organic revenue for the quarter was down 1.3%.

In terms of earnings we had several contract actions which we expected to take place in our second quarter, but which occurred in the first. And we have strong performance on a number of fixed price programs which also contributed to the strong earnings in the quarter. Our tax rate benefited from the adoption of the new accounting rules related to share based payments, gains from the change in value of our deferred compensation assets and deficit incorporate life insurance policies, and the benefit of the work opportunities tax credit.

Slide seven, please. DSOs, or day sales outstanding, were 59 days, a three day improvement from the June quarter, reflective of our focus on cash generations. We realized $58 million of operating cash flow in the quarter, 157% of our net income, keeping us on pace to generate at least $240 million of operating cash flow in the year. Net debt at the end of September was $1.3 billion, and our net debt to trailing12-month pro forma adjusted EBITDA leverage ratio is now at about 3.7 times.

Turning to our FY 2017 guidance, based on first quarter results and expectations for the rest of the year, we are reiterating our revenue and net income guidance. We are increasing our GAAP diluted share count guidance as resulted in a new share based accounting rule which reduced our GAAP tax expense and at the same time increased share count. The lower expected tax rate is reflective of the tax items I mentioned earlier in my remarks.

Now, here is John to provide operational highlights. John?

Thanks, Tom. Let's go to slide nine, please. I too am very pleased with our performance this quarter. We won a considerable amount of new business while protecting our revenue base through recompete wins. These awards and successful resolution of key protests give us continued confidence in our full-year guidance. Our backlog and pipeline remains very healthy, and further validates our focus on mission critical and enduring business and delivering value services and high-end services.

As Tom mentioned, revenue in the quarter exceeded expectations driven by unplanned material purchases requested by our customers. As we have stated in the past, we do this type of purchasing as a service to the government when needed. And we are extremely happy to be in a position with the right contracts to serve our customers' evolving mission requirements. We view this as an end of government fiscal year purchase, that will not continue beyond the first quarter. Our higher than planned profit was due primarily to core CTI contract performance and timing of certain contract actions.

Slide 10, please. Turning to awards and funding; we continue to win business across all of our addressable markets. We won $1.9 billion in contract awards during the quarter, which as Ken mentioned, does not include any value for our award of the OPM recompete since it is a multi-award IDIQ. This still results in a trailing 12-month awards over revenue ratio of 1.3 times, very healthy.

It's also important to note that two of our three protested awards, with a combined value of approximately $500 million, have been resolved in our favor as expected. The remaining $100 million award made in the June quarter of our fiscal 2016 is still under protest, although we do expect a similar positive outcome. And no additional awards received in the first quarter of fiscal 2017 have been protested.

Some of our key awards this quarter were; a prime position, a $480 million multiple award IDIQ contract for the office of the assistant secretary of defense for special operations and low intensity conflicts, supporting counter-narcotics and global threats. This contract represents new work for CACI in multiple market areas, primarily intelligence systems and support; five IDIQs with a combined ceiling value of approximately $495 million with a classified customer to provide intelligence systems and support; and CACI has already won more than $44 million in task orders.

It's worth highlighting the successful resolution, in our favor, of CACI's award by the US Air Force of its $446 million contract to provide operations, maintenance and sustainment for the consolidated Air Force control network or AFFCN, modifications, maintenance and operations contract, called camo. As we successfully implement this new program we'll expand the support we provide to command and control, and large scale global space systems sustainment programs.

Slide 11, please. Our revenue plan now consists of 90% existing business, 7% recompete and 3% new. An opportunity pipeline remains strong, with over $10.2 billion in pending contract awards, which about 80% is for new business to CACI. We also expect to submit another one -- another $16.8 billion over the next two quarters, with 84% for new business. Our America-based strategy is working, and we are resolute on winning new business, and delivering innovative and high quality -- to our customers. With that I would like to turn the call back over to Ken.

Thank you, John. Thank you, Tom. I appreciate your comments. Let's turn to Slide 12, please. We started FY 2017 well. We delivered excellent financial results, and we continue to build our backlog with a third consecutive quarter of awards above a billion dollars, and we reiterated our revenue and net income guidance for FY 2017. CACI is focused on winning high value solution business across each of our 11 market areas. And we look to the future with confidence in our strategy, and in our supremely talented employees who are committed to ensuring our customers succeed in all of their critical missions. I thank all 20,000 CACI employees for our success.

With that, Jason, let's open the call up for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And our first question comes from Brian Kinstlinger from Maxim Group.

Thanks. How are you? Nice quarter.

Thank you.

My question -- I've always asked about business from new awards; so you posted about $380 million in the quarter. And that was about flat year over year. And if we look at last year, new business awards were down. So my question is you are a bigger company, seems like the pace of the awards industrywide are improving, so I'm curious if you could explain or give your thoughts on the new business trends? And sort of maybe what's led to that decline and maybe how you see the future with new business awards?

Yes, great question. First of all I'm very pleased with -- I think as you could tell from the call we've set a record now, over three quarters, we never been at a billion dollars worth of overall awards. And particularly with 32%, 33% of all those awards, about $1.5 billion in the last three quarters being for business that is new to CACI. To me that's representative of the way we are -- that our strategies have been working in the marketplace.

As to first quarter, frankly, first quarter could have been a completely different number were it not for two weeks. Camo came in the latter part of the fourth quarter of FY 2016. We actually thought that it might be in the first quarter. So frankly that's a matter of timing. The important part of that is that we're winning and we're winning these larger jobs at a rate that I think is consistent with where we want to be in the future, particularly around the higher value solutions business. Which to be honest, they're harder, takes more time, takes a much longer endeavor in order to be successful at that kind of business.

But that's sort of the bigger picture. I'm going to ask John to give you a few more stats on how you might also be thinking about how new business gets added into CACI. So John?

Yes, sure. So Brian, we always share numbers like bids we expect to submit the next six months, and pending awards, but if we focus specifically on when we announce awards for the quarter -- a little more transparency on what that number means. About 20% of our contract awards in the first quarter were clearly for what we always talked about being new business. Another 35% of that total were for recompete awards. So about 55% of that is what those new and recompete award categories traditionally are.

What we don't talk a lot about is 45% of the awards in the first quarter are driven by growth on existing business. So this is particularly noteworthy for us and very reflective of the quality and the customer relationships we have. When we look at that work, we internally talk about that as on contract growth. But frankly, as we all look at our awards number on a quarterly basis, we would consider that 45% work to be new, because that is new to CACI. That is work that a customer could have put on anyone else's contract or the customer could have openly competed and instead they made a decision to provide that new work to us.

So if we look at the $1.9 billion in the first quarter, all up 65% of that would be considered new, and 35% of that would be considered recompete. It's been that way for every quarter that we have shared that number, but we felt that it was probably time to be even more transparent as to what that awards number means.

That's actually super helpful. I thought it was always new and expanded work so that helps me out a lot. The CAMO contract, was that recognized in fourth quarter bookings and was it a new program? Or will it be recognized in Q2 in bookings?

No, it was recognized in fourth quarter, in bookings. We went through the protest, the protest has been resolved. What you'll start to see now in the second quarter is the revenue ramp up as a result of the successful resolution of the protest. And by the way, I should tell you that that was -- we felt the award might be late fourth quarter, early first quarter. We did plan the protest period into it. So our -- the impact of the protest was thought of in our planning cycle. We planned for it to start in second quarter anyway.

We have to be fully up and open by November 23rd and we're right on track for that.

Our next question comes from Edward Caso from Wells Fargo.

Good morning. Tom, could you help us break down a little bit on outperformance in the quarter and how much was pulled forward? Obviously, you had -- you suggested a very soft first fiscal quarter came in tremendously well. So how much was a pull forward and how much was an up side? Help us with that.

Yes. So when we provide you some color to the first quarter, we told kind of the market, that we expected net income to be below $30 million, we came in higher than that. You see the numbers in front of you. You -- Ken, John and I spoke about it in a couple different events, some pull forwards, some -- increases in underlying performance. I would say that kind of roughly speaking, the majority of that was pull forward activity. The remaining part was probably kind of one time singular events.

There were some contract modifications where we were having ongoing discussions with our contracting officers about changing some rate structures, other arcane pieces to our business. We expected those to be resolved favorably in the second quarter, some of them resolved favorably in the first quarter. And some of those had some retroactive pieces to it, so some of the look back was for several quarters, and so that drove some one time events.

The other piece was we had some fixed price programs and we do a very good job of managing fixed price programs, at the end of every accounting period, every month we true up fixed price programs and we look at the profitability of those and we had some goodness associated with those program.

My other question is on comfort level with financial leverage and at what point do you get back and -- in the acquisition mode again? Maybe a sense of what the market is, what you're looking for out there in the market today? Thank you.

Yes, thanks for the question. This is Ken. We're all -- we consider ourselves to be a strategic integrator. So we're always looking at what's going on in the market. Presently I think we're at about 3.7 to 3.8 net debt to EBITDA ratio, so there is not a lot of dry powder in the house. There are some things that are in the marketplace and we continually look at them, but -- and that's just sort of our normal course of business. The -- it is really important, I think, that we -- as we have with our last couple acquisitions to talk a little bit about why it -- what is it that we're looking for when we go. We value strategic capabilities that we can see from -- and access to new customers, as a result of acquisitions. And they've got to play a long-term role in the growth at CACI.

In terms of getting us into areas, we don't want buy sales. What we want to do is buy access to places where we think we could cross sell or where we think we can expand -- frankly expand the number of markets that we support by getting into completely new areas where we have. I think we're at a really good size today, so we're not playing this game right now to look at scale or to add revenue. We are looking to add areas where we believe the market is going to grow. Such as we talked about in the acquisition of NSS. And I think as of the fourth quarter last year, it was better than 20% accretive for us, and highly successful in terms of the people it brought to us, the philosophies it brought to us, the scale, and the points into some key growing markets such as enterprise IT and intelligence systems. We will do something again in the market, that is the third pillar of our overall strategy, but I couldn't tell you that I would do -- that I -- I couldn't say anything about the timing of that right now.

Thank you. Next we have Cai von Rumohr from Cowen and Company.

This is Lucy calling in for Cai. Following up on the question about the pull forwards, is your -- are those coming out of Q2 or spread through the rest of the year? And is it fair to assume that without the true ups and some revenues being pulled forward that Q2 may be sequentially down from Q1?

Yes, I'll start off. The pull forwards were generally from Q2. I think that's the -- a fair assumption. As you know we're reluctant to get in the habit of providing quarterly guidance, every time I try to dip my toes in the water -- I've been proved wrong. I'm going to refrain from talking specifically about the second quarter in the guidance.

And also, housekeeping, just on the other direct cost that is about 54% of your cost of goods sold, that's slightly above your typical 50 percentage level, is that all of the material buys that you spoke of, that's one time? Or is there anything else in that?

Lucy you're right. It's due to the one-time material buys. That increased the revenue in the first quarter. It also changed that ratio we've been trending 50-50, and that's this quarter we had slightly more ODCs than direct labor. That's not reflective of our direct labor base, that's more reflective of the one time material purchases.

Thank you. Next we have Bill Loomis from Stifel.

Good morning. Good quarter.

Thank you.

First just one clarification, the 45% of the new business contract wins that are business driven by growth and existing business; is that 45% the value of the incremental portion? Or is it the total contract value, including what you were doing plus the incremental portion?

Bill, this is John. It's the incremental portion.

Good. On OPM, I know you don't like to talk specific about it, but can you help us on how you see a task order flow, the visibility you have? You said the contract is going to -- your task orders are running at the same run rate with this -- with the renewal. But how frequently are the task orders coming out for new jobs? How much visibility do you have over the next year on the work that you're doing on OPM?

Yes, Bill, thanks. First off, extremely proud that we were successful in this recompete. It was our largest of the recompetes for FY 2017, in the -- and the team has done an outstanding job. I will address two different pieces of this. First, it's clear that the customer added two additional providers, and that's really so that we all collectively can get at this backlog issue, which has been out there for many, many years, and will continue to be a high level of backlog investigations.

Secondly, as we -- as we look at it and as Ken mentioned, the award value for OPM in our recompete numbers is zero. We only book those awards as those task orders come in. Frankly, we received new tasking each week, so as those come in, those are actually booked as incremental orders that will be considered recompete business. I think we shared a couple quarters back, we were north of $100 million worth of revenue on an annual basis, that's about all we can say on that. We would expect that number to stay the same, if not slightly greater based on number of background investigators we're able to continue to track. I think what's very important is that there is plenty of work to be done, so for those of you who were looking at OPM having two providers, and now having four, that just means that more of the government's backlog will be addressed sooner versus all of us receiving some smaller amount of share.

Thank you. Our next question comes from Jon Raviv from Citi.

Good morning. Thanks for taking the question.

Good morning, Jon.

Can you address sales growth linearity over coming quarters? This quarter seemed to be looking down about 1% organic. How do you see that trending going forward? How does that interplay with EBITDA margin as material purchases come off but as mix improves?

Yeah, so thank you, John. This is Tom. We're still providing annual guidance, and what we said previously based on the mid-point of guidance, we respect our organic growth to be negative 5%, 5.5%. A nice quarter for us due to those one time events. But we are keeping our guidance intact. So therefore organic growth guidance would be intact. We expect to see some market improvements near the end of the year, in particular going to FY 2018, and FY 2018 driven by some of the new business wins that Ken spoke about already, that we anticipate. And so that's kind of generally what the trend looks like without being very specific. Ken, you may want to elaborate.

I think that was good.

Okay. That was good. And then talking about FY 2018, Ken, what gives you the confidence in being able to outgrow the market by 100 to 400 basis points? Is there a notion of how much more business or new business you have to go get? Or as far as you're concerned, the vast majority of that is already in your backlog and in previously awarded vehicles?

John, thanks for the question. So honestly, I think the bigger impact to our business is we've been growing all along but we've also been shrinking in certain parts of our business that have gone away. I used the example in our guidance call of a single contract vehicle that had revenues of in the $840 million range in 2012, and about $75 million. We are largely not planning on that business anymore. And now we have a base of business that we know is more enduring. Not, of course -- as example in the first quarter, we did see that contract come up with additional funding that wasn't in our plan, but that was consistent with sort of rebasing that plan. And frankly I'll take that goodness and I'll give that support to that customer anytime of the day because that's what we do being a national security company.

Where the confidence comes from is three-quarters of greater than one billion dollars, 32% in the last three quarters that we've done, I expect a stronger quarter because of the way the contracts are laying out in the second quarter than we may have ever had historically. We've got to win -- we still have additional business to win, but at the end of this year, once we get rid of the -- once our plan takes into full effect, the sort of reduction of those ODC pass-through work and replaces that with higher value solution, and higher in-services, that's where the confidence comes from. And frankly, starting the way we have started first quarter does nothing but reinforce that strategy that we put in place four-years ago has been working. It's taken its time to do that, but it really is a reflection of the newness of how customers are buying versus where we were positioned as a business three to four years ago.

Thank you. Our next question comes from Amit Singh from Jefferies.

Thanks for taking my question. Just a follow up on fiscal 2018 guidance. You're projecting revenue growth of around 2% to 5.5%. So is that completely organic or you're baking into potential M&A that might come along?

This is Ken. I'll answer that part of it. We -- that is a projection around organic growth. The thing that we strive most on here at the company is returning to organic growth. It is much of our Senior incentive systems are based on that these days. If we acquire somebody, that will be in that mix, but we're really looking to come to the street. We saw the benefit in the first quarter of 2016 -- first and second quarter of 2016, we felt that we were there, but we had -- we weren't quite ready yet. We think getting through 2017, redoing our plan in such a way that it's reflective of the new solutions business is really what's going to drive that. So if we acquired then we would be growing more. We grew year-over-year 13%. So we like that, but that was acquired growth. Once we add organic growth to that, then I believe we will be hitting on all cylinders.

Okay. Great. And just in this year, this quarter, the organic revenues are down slightly more than 1%. But your full year guiding negative 5% to 5.5%. But the commentary seems to suggest that things should improve as you move forward in the year. So if you could help explain why organic revenue growth will actually decline based on your guidance the rest of the year?

Yes. This is Tom. I'll take that. When we provided our FY 2017 guidance, we spoke about a bridge from FY 2016 to FY 2017. Some of the things which would add to revenue, new business from 2016 and 2017, in NSF and the like. But we also had some reductions, some headwinds associated with our reduced pass through material purchases. A couple recompetes which were being more commodotized -- which we were unsuccessful with part of the strategic strategy, in a natural contract life cycle. Those are such that they spread out differently among each quarter.

And so I think to your question, if we expect five-year decline for the full year, the first quarter was down 1%, kind of mathematically that suggests the other quarters are down greater than 5%. And those are concentrated more in the second and third quarter. As we get closer to the fourth quarter, we expect to see some of those items I mentioned, the reduced pass-throughs, commodtized recompetes, in the natural contract life cycle to abate, and so that should provide a little bit more color as to how organic kind of revenue might flourish.

And this is Ken. I think it's also useful that, in terms of executing our plan this year, as well as we did in the first quarter, there is three more quarters to go. Against a little bit, not sure what the headwinds would likely be as a result of the budget. There is an election going on, which I don't know that that has that big of an impact but it could have an impact on how Congress and the administration in a lame duck session tries to come to grips with what they do with a full year budget. We hope that that happens.

But we still have 6% of our recompete and 3% of our new business to go out and capture. We have a very strong pipeline. Based on the way we started first quarter, I'm confident that we'll do that. But I don't want to be overly confident, given that there's a lot of runway. I'm never going to give up runway in front of me versus runway behind me. So we continue to believe that reiterating guidance is a bit prudent at this point in time, but that should be -- we should know more about that by the end of the second quarter.

Thank you. Next we have Tobey Sommer from SunTrust.

Hi. This is (inaudible) for Tobey. Thanks for taking my question. Given the upcoming election and assuming the polls stay the way they are now, what are you anticipating in terms of any changes to the pace of contract awards? And if you could talk about your long-term organic growth beyond fiscal 2018, that would be great. Thank you.

Well, so predicting the election is not something that I'm going to -- I've not been paid to do that, like many others, and so probably won't do that. But here is what I can tell you, generally. Having been in this business for 33 years, and been through a few of these. Typically the first year you don't really see a great deal of impact. First year is really about whoever the winner is, bringing on their staff, bringing on their team, and then you start to see a bit of the policy be played out in the second and third year. and that's what I would be looking to see.

In the general macro sense of the things that would being a national security business, I don't think that our election is going to solve anything on the global front. And so I read an article recently that says throughout everything else and every other industry in the world, the defense industry is probably going to be quite stable through this period of time, because I don't see our election having an impact on the thought processes in -- with some of the hotspots around the globe. At least not anywhere in the near-term.

As far as longer term, I'm not ready to give FY 2019 to FY 2025 guidance quite yet, but I would tell you that in a stable environment, given that we have shifted away from a predominance or a certain part of a kind of business, such as the pass through contracting, to more enduring value added work. I think that's sustainable over a longer period of time, and business systems are going to need to be bought. Next generation IT systems are going to need to be put in place. The efficiency of government is going to continue to be a very strong desire.

And we're in the midst of all of that, in addition to the things that we can't talk about because we have near peer parody with -- in a number of places that our government, in a classified sense, is going to continue to invest in very heavily. Over the long run, I believe once we hit and once we get to FY 2018 in the goals that we have set for ourselves, I believe that is sustainable and I would be looking to increase that slightly every single year.

Thank you. (Operator Instructions). Our next question comes from Mark Jordan from Noble Financial.

Good morning, gentlemen. Question relative to the -- your backlog of submitted bids and what you're planning to put in in the next two quarters. That totals about $27 billion, about $22 billion of that is new business by your numbers. One of my questions here is that is obviously very large number, multiple questions around that; how do you prioritize what you're going after? And is it possible to focus what you're going after and put more resources behind the bids to potentially increase your possibility of a successful conclusion?

Yes, Mark, great question. And let me start by answering it this way. When we started adjusting the way we needed to address the changing market three to four years ago, we put in place a philosophy that said we needed to bid fewer, larger and more complex. So why was that? Well, we wanted to get away from the commoditized side of the business, which was where -- the short cycle part of the business is what became the bill payer in 2013 and 2014, in particular where we saw 10% declines in overall business of.

And so we need to look for -- at our size now we are capable of competing for and winning any job of almost any size that is not a hardware procurement inside of the federal government. And that could be IT, it could be the O&M, major complex enterprises, such as we won with Air Force satellite control network, most recently. And so what you described is exactly that philosophy. There is one very large bid.

In fact, one of the changes we saw in our bidding from -- excuse me, in our bids to be submitted, was a very large bid that we didn't believe, after we did considerable work on it, that the customer was really serious about having something new happen, so we dropped it. And that was a $5 billion contract opportunity. There is another one that we're pursuing now which shall remain nameless, that is has a total value of about $8 billion over a seven or eight year period that will be submitted here in the next week, and that's part of the business to be coming.

But what you described is we are putting more effort into a smaller number of larger contracts and starting much earlier. And it has taken some time to adjust to that, both culturally and -- frankly you got to get in front of the customer with enough cycles that they see you as a serious potential supplier to them. And that's what I believe you have started to see with our billion dollar plus quarters, which typically we would have one on an annual basis and then we would be 600 or 700 million. Some of that gets acquired, some of that is through acquisition -- but a lot of it is through -- we're winning bigger jobs and performing on bigger jobs.

Okay. I guess a follow up question related to that. As an outgrowth of that strategy, as the process matures, if you have unique or surprisingly positive outcomes, then you could be in a position where you could meaningfully surpass that 1% to 4% organic growth in excess of market?

Yes, I mean, absolutely. And I'll have to tell you that in the private moments when we're talking about our business, that's really what we want to target. But to be -- realistic and to be -- to not -- to get in front of our ski or overski our ski -- we put out a range and we put it out rather modestly. That is our goal. Our goal always has to be to win everything that we bid. That's probably statistically not possible, but it's certainly a gel and you get better by trying to achieve that goal.

Thank you. And that will conclude our question-and-answer session. I will now turn the call back to Ken Asbury for closing remarks.

Well, thanks, Jason, and thanks for your help today on the call. We would like to thank everyone who dialed in or logged onto the webcast for their participation as well. We know many of you will have follow up questions. And Tom Mutryn, Dave Dragics, and Dan Leckburg are available for calls later this morning and today.

This concludes our call. Thank you, have a very good day and we really appreciate our your interest in CACI. We'll talk to you again soon. Thank you.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participation. You may now disconnect.