CACI International [CACI] on Wednesday posted a double-digit decline in net income due to lower sales, higher interest expense, severance expense and costs associated with a recent acquisition, although the company said its third quarter results were in line with expectations and its outlook for the rest of the fiscal year is intact.

Net income fell nearly 20 percent to $30.8 million, $1.19 earnings per share (EPS), from $38.4 million ($1.62 EPS) a year ago, missing analysts’ expectations by three cents. Operating margins slipped 90 basis points to 6.7 percent.

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

Award delays, lower run rates on professional services contracts, and less volume for war-related work in Afghanistan led to a decline in sales to $900.4 million, off less than a percent from $906.2 million a year ago.

While the amortization of intangibles associated with CACI’s acquisition last year of the intelligence, cyber and C4ISR solutions provider Six3 Systems trimmed the company’s earnings, Six3 still generated $3 million of net income and $104.7 million in sales, mitigating what otherwise would have been bigger drops in the company’s top and bottom lines. CACI’s organic sales in the quarter were down 12 percent.

Even though there is more budget clarity through the end of the government’s fiscal year 2015 as a result of the congressional budget deal earlier this year that also removed the near-term threat of sequestration, CACI said customer award activity is still sluggish.

“We don’t see a big change in front of us,” Ken Asbury, CACI’s president and CEO, said on Thursday’s earnings call. He added that current budget pressures, including the potential return of sequestration in FY ‘16 coupled with “global flashpoints compound the burden of our customers.”

Bookings in the quarter were below sales at $794 million but up over 20 percent from a year ago while free cash flow was a healthy $97 million. Company officials said that 25 percent of the orders represented new business with over half of that taken from incumbents.

Total backlog at the end of the quarter stood at $7.3 billion, including $1.6 billion that was funded, compared to total backlog of $6.9 billion and funded backlog of $1.7 billion at the end of the company’s fiscal year 2013 last June.

CACI still expects sales for the year to be in the range of $3.5 billion to $3.6 billion and net income between $130 million ($5.12 EPS) and $140 million ($5.51).