CACI International [CACI] on Wednesday after the markets closed reported strong fourth quarter and fiscal year 2020 results marked by operational performance and robust order flow, easily overcoming challenges related to the COVID-19 pandemic and setting the government contractor up for gains in the new fiscal year.

Net income soared 87 percent in the quarter to $93.7 million, $3.68 earnings per share (EPS), from $50 million ($1.96 EPS) a year ago, beating consensus estimates by 28 cents per share. The ongoing pandemic clipped $13 million from the bottom-line. Operating margin in the quarter increased 4 percent to 8.9 percent.

Higher operating income, up 65 percent, and lower interest expense drove the bottom-line gains, CACI said. The increase in operating income was due to higher sales and improved margins.

Sales increased 9 percent to $1.5 billion from $1.4 billion a year ago with 8 percent of the increase organic. CACI said COVID-19 impacts depressed revenue by $58 million in the quarter.

CACI introduced guidance for its 2021 fiscal year, with sales expected to be between $6 billion and $6.2 billion and net income between $347 million ($13.50 EPS) and $367 million ($14.28 EPS).

Nearly 6 percent of the sales growth will be organic and the acquisition on Wednesday of Ascent Vision Technologies (AVT) will contribute about $50 million in revenue in FY ’21. CACI disclosed on its earnings call Thursday morning that it paid $350 million for AVT, which has key capabilities on electro-optical and infrared imaging and counter-drone technologies.

Mergers and acquisitions remain CACI’s top priority for capital deployment, John Mengucci, the company’s president and CEO, said on the earnings call.

The outlook assumes a negative $100 million to $150 million impact to sales from COVID and a $20 million to $30 million hit to net income through December 2020.

In FY ’20, CACI’s sales increased 15 percent to $5.7 billion from $5 billion, with 8 percent of the gain organic. Net income increased 21 percent to $321.5 million ($12.61 EPS) from $265.6 million ($10.46 EPS). The negative impacts for the year from COVID were $68 million on sales and $18 million on net income.

Free cash flow in the year was $438.9 million and orders were a record $11.6 billion with 55 percent of the bookings representing new business. Orders in the fourth quarter were $3.4 billion and backlog at the end of June stood at a record $21.6 billion, up 28 percent from a year ago.

The highlight for awards in the fourth quarter was a $1.5 billion contract, the largest in the company’s history, to provide transport and cyber security services to the National Geospatial-Intelligence agency. Half of the work is new for CACI, Mengucci said. The contract has a five-year base period and five one-year options.

If there is a downturn in defense spending, which makes up about 70 percent of CACI’s revenue, Mengucci said he believes the company is well prepared versus the last time military budgets declined beginning in 2011. For one, he said, CACI now generates more revenue from technology where the company owns the intellectual property than it did before and relies less on service work than it did before. Technology-related sales also drive higher operating margin, the company said.

He also sees strong bipartisan support for not letting defense budgets shrink like they did nearly a decade ago.