CACI International [CACI] on Thursday said it has acquired a professional services unit from General Dynamics [GD] that bolsters CACI’s work with the Navy and provides it with the opportunity to offer its existing capabilities to new customers.

CACI paid $84 million for the Systems Engineering and Acquisition (SE&A) Support Services Business Unit, which GD acquired earlier this year as part of its purchase of CSRA, Inc. CACI also said the acquisition will added about $150 million to its sales in fiscal year 2019, which began on July 1. The company also expects the deal to be accretive to earnings in FY ’19.

CACI raised its sales guidance for the year by $150 million to between $4.7 billion and $4.9 billion and its earnings guidance by 16 cents per share on the low end of the range and 15 cents on the high end to between $9.14 and $9.53 earnings per share (EPS).

The SE&A unit provides systems engineering, design, development, program and integration support, and test and evaluation services to its Navy customers. CACI said that the business unit supports the life-cycles of “virtually every major U.S. naval shipbuilding platform,” with key customers that include the Naval Sea Systems Command and other commands and offices.

CACI also said the acquisition expands its business in surveillance and reconnaissance, and logistics and material readiness markets.

The “acquisition will support CACI’s growth and amplify our position as a leading solutions and services provider to the U.S. Navy,” Ken Asbury, CACI’s president and CEO, said in a statement. “This team brings us an exceptional track record of winning major Navy programs of record, unrivaled subject matter expertise, and deep customer relationships, which gives us a significant competitive edge in pursuing large-scale, enduring opportunities across the Navy.”

On CACI’s fourth quarter FY ’19 earnings call Thursday morning, Asbury said the acquisition “will fill capability gaps, it added new customers, the cultural match is fantastic and the financials are very attractive.” He added that the SE&A deal comes at a time when the Navy “will be pouring a lot of money into shipbuilding and modernization of platforms.”

Asbury added that CACI is open acquisitions that add new capabilities or customers in its 12 markets. Organic growth remains the company’s priority for expansion, he said.

A spokesman for GD told Defense Daily that “In accordance with GD Information Technology’s commitment to our Navy customer, we divested an organizational conflict of interest line of business we acquired with the CSRA acquisition.” CRSA was folded into GD’s IT segment.

CACI President and CEO Ken Asbury
CACI President and CEO Ken Asbury

Houlihan Lokey was GD’s financial advisor on the deal. CACI didn’t use a financial advisor.

For the quarter, CACI’s sales grew 3 percent to nearly $1.2 billion and net income rose 17 percent to $51.8 million ($2.05 EPS), topping consensus by 26 cents per share. The bottom line benefited from lower corporate tax rates that went into effect on Jan. 1, which added $5..3 million (21 cents EPS) to net income.

CACI scored $1.5 in orders in the quarter and $5.2 billion for the fiscal year.

Overall sales in FY ’19 were $4.5 billion, up nearly 3 percent from a year ago, while net income rose 84 percent to $301.2 million ($11.93 EPS). Excluding the lower tax rate, net income would have been $197.9 million ($7.84 EPS).