In the second quarter, we generated revenue of $2.2 billion, representing 5.7% year-over-year growth, of which 4.5% was organic. EBITDA margin of 11.8% in the quarter represents a year-over-year increase of 70 basis points. This performance was driven primarily by strong program execution, timing of some higher margin software-defined technology deliveries, and overall mix. Second quarter adjusted diluted earnings per share of $6.81 were 14% higher than a year ago.
Finally, free cash flow was $138 million for the quarter, driven by our strong profitability and increasing cash generation from working capital management. Our leverage at the end of Q2 is 2.4 times net debt to trailing 12-month EBITDA. We intentionally allowed leverage to drift slightly below our target range in anticipation of the acquisition of ARCA. As we announced in the call a month ago, we expect leverage to increase to 4.3 times once the acquisition closes.
This underscores our consistent financial performance, disciplined approach to capital deployment, and our demonstrated access to capital. In fact, we expect leverage to return to the low threes within six quarters of closing ARCA, based on the strong cash flow characteristics of the combined business. We're pleased to be increasing our fiscal 2026 guidance across all metrics. This represents total growth of 7.8%-10.1%, which includes slightly less than two points of growth from acquisitions.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | FY2026 | $9.3-$9.5 billion (total growth 7.8%-10.1%, including slightly less than two points from acquisitions) (Increased) |
| EBITDA margin | FY2026 | 11.7%-11.8% (Increased) |
| Adjusted net income | FY2026 | $630-$645 million (Increased) |
| Adjusted EPS | FY2026 | $28.25-$28.92 (growth of 7%-9%) (Increased) |
| Free cash flow | FY2026 | at least $725 million (implies 65% growth in free cash flow per share) (Increased) |
| Revenue | Q3 FY2026 | Comfortable with current consensus estimate |
| EBITDA margin | Second half FY2026 | Consistent with what was seen in the first half |
| Metric | YoY | Note |
|---|---|---|
| Revenue | +5.7% (4.5% organic) | Reflected the modest shutdown disruption expected; revenue and awards generally reflected modest shutdown disruption. |
| EBITDA margin | +70 bps to 11.8% | Driven primarily by strong program execution, timing of some higher-margin software-defined technology deliveries, and overall mix. |
| Adjusted diluted EPS | +14% to $6.81 | Greater operating income along with a lower share count more than offset higher interest expense and a higher income tax provision. |
| Backlog | +3% to $33 billion | Reflected successful business development and operational performance; funded backlog increased 7% over the same period. |
| Indirect cost | Below 21% of revenue for third quarter in a row | Fourth year of reducing indirect cost as a percentage of running the business while in strong growth mode, by resisting the impulse to grow infrastructure as the top line grows. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ARCA acquisition | Announced on a call a month ago | Pending acquisition expected to raise leverage to 4.3 times once closed; not included in FY2026 guidance; enhances CACI's position in the space domain via the Danbury Optics business and sense-making capabilities | Advancing |
| Leverage / capital deployment | Allowed leverage to drift slightly below target range ahead of ARCA | 2.4 times net debt to trailing 12-month EBITDA at end of Q2; expected to rise to 4.3 times at ARCA close and return to the low threes within six quarters | Temporarily rising then deleveraging |
| Government shutdown impact | — | Modest expected disruption to revenue and awards; delayed material purchases and program timing; slow rebound in award decisions but pipeline filling back up | Recovering |
| Reconciliation funding / Golden Dome | — | Border security, counter-UAS, space, and intelligence (left-of-launch) programs being positively impacted; a range of outcomes included in updated guidance; viewed as constructive macro environment | Emerging tailwind |
| Acquisition reform / FAR Part 12 and OTAs | — | CACI positioned for shift from cost-plus to firm-fixed-price; sees itself in the third or fourth inning of acquisition reform; OTA contracting up 2.5x in last two years versus prior five years | Favorable shift |
| Electronic warfare / counter-UAS | — | $2 billion EW revenue slice; counter-UAS treated as part of EW; ~$300 billion TAM for a ~$9.4 billion company; reconciliation adds tens of billions to addressable market | Expanding |