LMT Lockheed Martin Corp

CACI International Inc. plans to focus on integrating its latest acquisition, but the federal information technology specialist's chief executive said Thursday that it is open to more deals in a year or so.

The company this week completed the $550 million purchase of an intelligence-focused services business from L-3 Communications Holdings Inc., the latest in a series of deals in the sector as contractors seek to build scale and extra capabilities in what has become a cutthroat business as a result of federal agencies toughening their procurement rules.

"As of this week, we're sort of a digester," said CACI CEO Ken Asbury in an interview after the company reported forecast-beating quarterly earnings alongside a return to organic growth for the year and a bullish 2016 financial outlook.

CACI's shares rose almost 20% at one point during Thursday's session, erasing a year-to-date decline that has afflicted most of the defense contractor community.

"The best thing we can do as a business is to figure out how to grow organically," said Mr. Asbury, a former Lockheed Martin Corp. executive who has led the company since 2013 and established it as one of the prime consolidators in the federal IT business.

CACI's 2013 purchase of intelligence specialist Six3 Systems for $820 million kicked off a string of deal making in the segment that accelerated last year as larger contractors including Lockheed looked to unload lower-margin services business, while smaller players looked for scale.

Leidos Inc. last week agreed to buy the Lockheed services business in a complex deal that will double annual sales to $10 billion, while Computer Sciences Corp. last year combined its government unit with SRA International to form CSRA Inc.

CACI's purchase of the L-3 business will boost its own annual sales to $4.4 billion and is expected to be accretive in the first year.

"They were us, trapped in a product company," Mr. Asbury said of the new acquisition.

The deal boosts CACI's leverage to around four times operating earnings, and though Mr. Asbury said the company was prepared to go a little higher, it would assess over the next 12 to 18 months what could be added to the portfolio while feeling no pressure to match Leidos in scale.

"We think investors have been nervous that CACI's results would point to broader issues in the industry," said Rob Stallard at RBC Capital. He said investors should be relieved by the rise in revenue and order bookings in what is traditionally a seasonally weak quarter for news business.

CACI's profit rose to $33.3 million from $24.6 million in its fiscal second quarter, with per-share earnings rising to $1.23 from $1.01.

The company's shares were recently up 13.8% at $91.85.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

February 04, 2016 16:15 ET (21:15 GMT)

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