CACI International Inc (CACI) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the CACI International conference call to discuss the pending acquisition of Azure Summit Technology. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference call over to George Price, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Thanks, Deseray, and good morning, everyone. I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning to discuss our pending acquisition of Azure Summit Technology, which we will refer to going forward as Azure Summit. We are providing presentation slides, so let's move to Slide 2. There will be statements in this call that do not address historical fact and, as such, constitute forward-looking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of this morning's press release and are described in the company's SEC filings. Our safe harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call. I would also like to point out that our presentation will include discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Let's turn to Slide 3, please. To open our discussion this morning, here is John Mengucci, President and Chief Executive Officer of CACI International. John?

Thanks, George, and good morning, everyone. Thank you for joining us to discuss our pending acquisition of Azure Summit. With me this morning is Jeff MacLauchlan, our Chief Financial Officer. Slide 4, please. Earlier this morning, we announced an agreement to acquire Azure Summit, a provider of innovative, high-performance radio frequency, or RF, technology and engineering focused on electromagnetic spectrum. This is an extremely compelling acquisition for CACI strategically, culturally and financially. From a strategic perspective, Azure Summit adds established and complementary technology and expands our customer presence. We are disciplined acquirer, buying great companies with differentiated capabilities to fill gaps and Azure Summit is another good example of this strategy in action. The company also has very strong cultural alignment with CACI and brings an exceptionally talented workforce. As we've said before, we achieve our success because of our employees' talent, innovation, focus on excellence and commitment to customer missions. Azure Summit is a company of talented people that also share those same ideals. The acquisition of Azure Summit is not only a strong strategic and cultural fit, it is also attractive financially to CACI, and one we were able to execute as a result of the strong financial position of our company. The acquisition is accretive across numerous financial metrics, and Jeff will share more details shortly. This is yet another example of our flexible and opportunistic capital deployment approach, which is focused on long-term growth and free cash flow per share. Slide 5, please. A brief overview of Azure Summit's business and capabilities will help illustrate why it's such a great fit for CACI and why we are excited for the combined company going forward, and the even more expansive technology solutions we will be bringing to customers. Azure Summit is a defense technology company, founded nearly 2 decades ago, with over 300 employees, 80% of whom hold security clearance, and more than half being engineers in areas of high demand. Their talented workforce designs, develops and processes deep technological -- possesses deep technological capabilities, and our hardware and system design, digital single processing, software development and highly automated testing that addresses signals and electronic intelligence, electronic warfare and ISR, enabling customers to dominate the electromagnetic spectrum. They build RF and other software-defined hardware, like the Switchblade product, which are incorporated into systems for maritime and airborne platforms. They've grown from a Tier 2 subsystem provider to OEMs and to a Tier 1 prime on programs of record, following a path similar to CACI's. In that role, they bring a sizable installed base, system production capabilities, system automated test differentiation as well as a diverse set of maritime and airborne platform customers. When we look at Azure Summit, we see a company with a similar strategic vision and appreciation of the challenges posed by accelerating technological change and innovation-focused culture and an unwavering commitment to national security. It is a perfect fit for CACI. Slide 6, please. Through the lens of our M&A strategy, Azure Summit is a fantastic acquisition. Our strategy identifies where we have gaps in capabilities, customer sets and/or past performance. To fill those gaps, we invest internally, we partner or we acquire. Let me discuss the strategic value of the combination in a little more detail. First, Azure Summit's strategic objectives are similar to CACI's, provide spectrum advantage through software-defined solutions. They have an established and mature RF hardware install base, one in which CACI's mission software can be inserted to expand the mission set to include Counter-UAS, detection of additional signals and electronic attack, just to name a few. The combination provides significant long-term opportunities across the DoD. Second, CACI has industry-leading capabilities for land, maritime and space. When combined with Azure Summit's additive presence in maritime and airborne platforms, this provides significant cross-selling opportunities. Together, we will expand the breadth of our customer access and gain additional customer insights, both of which are invaluable to growing across the market. Third, Azure Summit increases our footprint and rack mountable large platform SIGINT and EW mission systems, complementing our existing offerings. The combination of these capabilities gives our customers access to best-in-class form factors, software and talent across the entire spectrum of SIGINT and EW solutions. Finally, CACI currently manufactures a range of software-defined RF technology which we are seeing increasing customer demand. Azure Summit has developed a strong set of automated production testing capabilities and brings additional manufacturing capability. The combination of our capabilities enables us to address increasing customer demand with greater efficiency. In summary, this is a complementary acquisition that amplifies our focus on enduring, well-funded customer priorities. Our combined capabilities and technology expand our market and align with our strategy of delivering predictable growth, strong profitability and increasing free cash flow per share. With that, I'll turn the call over to Jeff.

Thank you, John, and good morning, everyone. Please turn to Slide 7. As John mentioned, Azure Summit is an extremely compelling acquisition for CACI in several ways. Let me discuss the financial aspects in a little more detail. We're acquiring Azure Summit for an enterprise value to next 12 months EBITDA multiple of slightly less than 10x. The all-cash purchase price is $1.275 billion. As a result of the structuring of the transaction, there is a tax benefit that we expect to realize over the next 15 years, present value of which is $194 million. So net of the present value of the tax asset, our effective consideration is $1.08 billion, which is the amount we refer to when discussing valuation multiples. Over the next 12 months, we expect Azure Summit to deliver approximately $440 million in revenue and approximately $110 million in EBITDA, which includes the impact of onetime transaction-related expenses. Azure Summit is a growing and highly profitable company that is accretive to CACI's revenue growth, EBITDA margin, adjusted EPS and free cash flow per share in the first year. We will provide updated FY '25 guidance in our normal rhythm after the transaction closes. In terms of financing, we've executed a committed bridge facility concurrent with the execution of the purchase and sale agreement. Permanent financing will be in place at closing. Currently, we expect to issue $750 million of new transaction debt likely at a 7-year term loan B, with the remainder of the purchase price expected to be funded under our existing revolving credit facility. Post closing, we expect net debt to trailing 12 months pro forma EBITDA leverage of 3.1x, slightly above our 2.5x to 3x target range with the ability to quickly return to that range based on the strong combined cash flow characteristics of the business. In terms of timing, we expect the transaction to close in our second quarter of fiscal '25, and of course, closing is subject to regulatory approvals and other customary conditions. In summary, we're extremely excited about the acquisition of Azure Summit and the significant benefits we expect to see from the combination. And with that, I'll turn the call back over to John.

Thank you, Jeff. Let's go to Slide 8, please. To wrap up, this is a fantastic acquisition for CACI. The combination of Azure Summit with CACI's technology portfolio, broad customer and contract base and significant business development and investment resources will enable us to deliver more value to our employees, our customers and our shareholders. For the employees of both companies, we are extremely well aligned culturally and share many common values. The opportunities to invest ahead of need, to innovate and to grow mean more opportunities for everyone. That theme is encapsulated by our employee value proposition. Their potential is limitless, so is ours. To the employees of Azure Summit, we're excited about the possibilities of the combined company. We look forward to welcoming you to CACI. For our customers, we will be one company with an unwavering commitment to your national security missions and deep understanding of the importance of the speed and agility that software and software-defined technology deliver. The combination of CACI and Azure Summit broadens access to our combined technology portfolio, enhances our ability to invest ahead of need, enables us to deliver capabilities even faster. And for our shareholders, acquiring Azure Summit is compelling both strategically and financially. It is consistent with our M&A strategy, which has served us well over many years. The combination of CACI and Azure Summit enhances our ability to drive long-term growth, invest ahead of need and increase free cash flow per share. With that, Deseray, let's open the call for questions.

[Operator Instructions] Your first question comes from the line of Peter Arment with Baird.

John and Jeff, congratulations on the deal. John, maybe if you could just talk a little bit about either programs of record or backlog, whatever you feel like is the best way to kind of highlight how Azure has done. It sounds like they've continued to be very disruptive from a technology standpoint, and maybe you want to, just as a follow-up, speak about the SIGINT opportunity that you think about the combination.

Yes, Peter, thank you. Look, let me start off with what they do and put a little more color than I shared in the -- in my prepared remarks. Look, they are an extremely compelling company. We've watched them for a number of years. We have partnered in the past. What I liked about it, frankly, first and foremost, they're culturally well aligned. 300 talented folks, over half of them have clearly tough to find engineering skills. They live and breathe mission just as everybody here at CACI does, with about 80% of their employees cleared. Their hardware has a sizable installed base on maritime and airborne platforms, and they've successfully designed, produced and delivered at scale. So like us, their customers trust them, they like their technology, and they want to work with them. Beyond the technology that they bring, they bring customer access and customer presence that, frankly, we don't have. They expand our airborne and maritime platform portfolio. They have a complementary presence within NAV war. They bring presence within NAV air. They also bring presence under multiple army ISR programs of record. So we have a much broader customer set to which we can cross-sell Azure Summit capabilities with our industry-leading DoD. So when we say customers, what I want people to do on the call today is think beyond that to flat platforms. We too quickly say that they're at NAV war as we are, but it's a number of platforms and what program offices they are in. That's where the true synergies are, levels to which you probably won't hear me talk about on these calls because that gets to a very business development like tactical level. But we have such a great opportunity here for -- to tap into additional narrow, deep funding streams that are going to drive additional growth. So the customer set that they bring, the hardware RF shops that they bring, the fact they well understand software-defined tech, the fact that their customers rate them highly on everything that they have delivered as well as being a strong partner on Spectral, that's sort of how I wrap a bow around why we're so excited to get through closing and start working on the number of synergies that we believe we'll have going forward.

Our next question comes from the line of Matt Akers with Wells Fargo.

I just wanted to ask about how you're sort of thinking about the balance sheet 3.1x after the deal. I think you said in the past, you're comfortable even higher than that, but just curious if you pay down a little bit more debt after this deal? Or are you still thinking about it as a pretty flexible options in front of you?

Yes, thanks for the question, Matt. Again, this is in our range. I mean we've said 2.5x to 3x, we will be at 3.1x and closing, but obviously not for long. The cash generation kind of gets us back in our target range relatively quickly, leaving us really plenty of room for -- to remain being flexible and opportunistic in the way we deploy capital. So I mean, we -- there's no significant constraint or restrictions here going forward. I mean, we'll continue our normal posture.

Great. And I guess just your numbers in the presentation imply kind of 25% margins from the company contribution this year? I think, Jeff, you said maybe there's some -- anything related to the deal included in that. But just curious how sustainable that is and how they're able to get their high margin.

Yes, Matt, thanks. Look, their technology is a mix of larger-scale systems technology deliveries on a number of cost-plus contracts and then shorter cycles structure defined hardware tech. Their margins reflect their higher mix of revenue in the last 2 areas, clearly. We will provide updated guidance once we get through closing and get through the initial phases of our integration on both revenue and on EBITDA financial measures. But they bring a hardware installed base that we can leverage with our mission software, get complementary and additive customers and programs, complementary technology. We would -- we're looking forward to sharing with you all the direct impact financially that they have in both revenue and initial as well as sustainable EBITDA margins.

Next question comes from the line of Tobey Sommer with Truist Securities.

From a timing perspective, is there a particular customer opportunity coming together at this juncture that prompted this? Or is this a sort of a union that you think could have happened at many or any point in time?

Yes, Tobey, thanks. No, there's no secondary reasons for timing of this deal. As you all know, this is, I think, our 99th deal. Look, this is a company that they were looking to move forward. At the same time, we were looking for outstanding companies who understand the importance of the electromagnetic spectrum. If we zoom out a bit, look, every conflict today, EW and electromagnetic spectrum is at the center of every single fight today. It's going to be at the center of any next fight going forward. And I really wanted to fill that gap of making sure that from kilohertz to gigahertz across every domain when it was land, air, sea and space, we have this area covered. It is clear from even early morning remarks from the Secretary of the Army this morning talking about budgets and electronic warfare, electromagnetic spectrum are going to be growing. This is where the fight is today. This is where the fight is going to continue. So the only time we've been better than announcing this today would have been announcing it 2 months back. So look, they're a partner on our Spectral program. They have a program, which is a precursor to Spectral. They're doing fantastic deliveries. It would be an easy connection that they and us and the Navy have had discussions around how do we make their long-term production run, followed by our long-term next-gen production run? How do we all collectively get capabilities out to the field at the speed of the fight? And I will punctuate the fact that every future conflict, electromagnetic spectrum and EW as well as kinetic and non-kinetic defeat mechanisms are going to be at the center. So this is exactly that kind of acquisition that really leapfrogs us forward again because I see demand growing. And I don't want to underwhelm the fact that they have 300 folks in digital signal processing, RF technology, and you've got to be really good at it to be able to make customers like the Navy and the Army and the future Air Force customers take a look at what we're collectively doing on programs like [indiscernible] and Spectral and be able to get them better EMS technology sooner. So I wouldn't read into a timing other than it is the perfect time to always do an outstanding acquisition.

Our next question comes from the line of Seth Seifman with JPMorgan.

I wanted to ask if there's maybe a little bit more you could say about the anticipated growth rate. You mentioned in the slides it should be accretive to the overall revenue growth rate of the company and just even some more qualitative commentary compared to the underlying growth rate that you guys talked about for the organic business, how you think about the growth rate here?

Yes. Thanks. I think we're going to kind of leave the quantitative response there to our regular guidance rhythm. But qualitatively, they are at the front end of a couple of very nice ramping up franchise-type wins. So we'll be talking more about that, but it's a quickly growing ramping business that we look forward to integrating into our own capabilities and then in a combined way, building on some of the things that John was referring to that could hopefully even be further accelerating.

Yes, Seth, let me give you some additional qualitative comments. Look, simply stated, their hardware is on multiple platforms. We love to put our software everywhere, where they are to get Navy, Army and then in the future, the combined company, the Air Force capabilities that they absolutely need. Some of the examples, just so we're not trying to show the 1 and 1 equals 3. We got a single library of over 800 signals, riding on their hardware would greatly expand everybody's capabilities. We can put software related to counter radars that could introduce easily to their platform customers today, a new and advanced capability. Our electronic attack that we have talked about after we sense and then we will hope, we locate how do we non-kinetically defend more fighters. And then our counter UAS software that can be expanded to include electronic warfare and electronic attack. What's nice about the combination of programs that I just mentioned, if that can be funded with O&M funds, think modernization through sustainment, think easier, think able to do a lot with a lot less oversight, but much more bunch. So not only can we bring our capabilities to platforms we're not on, they can bring their hardware also to the platforms that we reside on today. And their RF hardware technology and their Switchblade products really modernize state of the yard as to how simpler it can be to bring software capabilities on to our hardware platform. So in a qualitative measure, you'll hear us talking about those combinations as we go forward, both from a technological and awards level and then as we mature further into our financials.

Excellent. That's helpful. and then maybe just as a quick follow-up. Is there anything you could add about just kind of the genesis of the deal, how it came about and what the process was?

It's an interesting question. Look, I mean -- yes, look, we're always looking, right? We've been talking the last 4 quarters, I think as our leverage number has been lowering and everybody is asking us what you all going to do next, flexible and opportunistic capital deployment strategy. Because we're not announcing a deal, it doesn't mean that we're not out there looking for one. You've heard us talk in the past that there are a lot of great companies out there. But in some areas, the expected valuation multiple was beyond fiscally responsibly. This is a company, and timing is everything that through our working with them, we understood what we could both do together. Tom Green is their CEO. We've had a number of discussions as well as a lot of our engineering workforce, frankly, working together on similar programs. That all brings that right mix together, and you always have heard us say we want to be that company that provides employees of an acquisition a bright future. And Tom and his team and I and our team felt this was the right time. So thanks, Matt.

Our next question comes from the line of Mariana Perez Mora from Bank of America.

So my question is going to be about timing and approvals. Is there anything particular that we have to pay attention to in terms of like regulatory approvals?

No. We don't see any complicated factors here. I mean it's a fairly straightforward process, we think. Our analysis doesn't see any significant hurdles or anything, just a question of navigating through the process.

Okay. So any -- not any significant overlap on a contract or a customer that could like take more time than usual?

All the things that we do are done by at least several others, nothing here that we see as an issue.

Perfect. And then on the leverage, how much of that incremental that you are taking today, and how much you'll take upon the deal like being approved?

Well, as I said in my prepared remarks, we executed a bridge facility contemporaneously with the purchase of sale agreement. We expect by closing to have a term loan B in place for $750 million, the balance we'll use just from our normal revolving credit facility. So the incremental debt will be the $1.275 billion made up of those 2 pieces.

Perfect. And last, if I may, more on the qualitative arena. When you have highlighted across the call it's like software-defined expertise that they are bringing to the table, were you more excited about like to actually put these engineers to work with CACI engineers and actually expand these capabilities?

Yes. I mean, look, not every day that you can in one transaction connect our incredible engineering talent with yet another team of folks who not only have the right engineering skills, they have the right mission focus, and it's probably worth spending a minute on that. Look, culturally, we always talk about doing acquisitions that fill a customer gap or a capability gap. And these folks do that across the board. But what I'm most excited about is culturally just the ethos of the folks at Azure Summit who really understand the importance of mission. It's not mission at all costs. It's not providing customers every whistle and bang that they absolutely need without a good business deal behind it. But they have a long-term understanding of what it means to provide the war fighters what they need ahead of when they need it. They also have a strong appreciation for when we deliver, it needs to absolutely work. So they have been through the same path, maybe 3 or 4 years behind where who we are today, which is, you spend an amount of time trying to convince customers you have what they absolutely need, and then they have to see you perform at that level. They have shown what they have. Other vendors and other platforms have their hardware riding on them. They were able to unsee an aerospace and defense incumbent to go win the current version of [indiscernible] on a long-term upgrade path. They are working with us on our next-gen delivery of a program called Spectral. They have all the right building, building blocks and they uniquely fit with CACI. So that's the excitement level. That's why we're talking about people a lot because at the end of the day, we will recognize that really great people, really intelligent people, people with immense skills who have a love for the national security mission or what make these deals work, and I can't wait to perform collectively.

Next question comes from the line of David Strauss with Barclays.

Congratulations. Pretty much all my questions have been asked except for one. I guess everything you've described here sounds terrific, company growing quickly, great margin, accretive and all that. I guess how do you do a deal like this for 10x?

This is patient, disciplined acquisition process and capital deployment. I mean we have been talking for some time, David, about the fact that we didn't see multiples behave the way we expected them to as interest rates changed, and we thought the market was a little bit ahead of itself, and this is patient, diligent work we do every day.

Okay. There's nothing unusual in that EBITDA number that you disclosed today other than kind of acquisition-related costs. I guess, nothing unusual from an Azure side of things?

No, nothing unusual. There's a de minimis amount of transaction expense, low single-digit millions, which, of course, is a negative in this regard. But no, there's nothing unusual in that margin or the amounts that I referred to in my remarks.

Next question comes from the line of Louie DiPalma with William Blair.

CACI with this deal built its IP portfolio and becomes more like an L3 Harris type technology provider. From a big picture pro forma for this deal, are you able to estimate what percentage of CACI's revenue is related now to, or when the deal closes, would be related to signals intelligence, like including both products and services, would it be 25% or so?

Louie, thanks. I don't know if we've looked at that finite overcut, but here's some markers that I can put out there. First of all, they are a DoD-centric customer. So if you look at future calls, once the closing is approved -- I'm sorry, once we get to closing, we're going to show quite a spike of our DoD revenue as compared to our intel in our civilian areas. But I would sit patient because one of the things we're looking at as we've discussed is how do we take Azure's hardware and their capabilities and branding across our customer set that would include the intelligence community as well. Secondly, we're going to double down on our strategy by leveraging their hardware installed base and broadening our entire technology portfolio that will impact in a positive manner both revenue and EBITDA as we go forward. So as Jeff mentioned, at the appropriate time, we'll talk about what that does for fiscal year '25 and beyond. To focus specifically on SIGINT, really doesn't tell the entire story. I think what I want to get out there is, again, from kilohertz to gigahertz, [indiscernible] spectrum is large and it's broad, it's deep, and then the current conflicts you're seeing today, you're looking at both near peers and not so near peers using it very effectively. And the counter side of where you go is going to get that much more difficult. So it is clearly a main focus of ours. I think if you look at the 55% of our revenue, which is in the technology area, you're going to see a larger percentage that's in the signal collection EWEA world, which is exactly why I believe you all want us to be at -- when I tell you it is at the center point of every current global conflict today, every, exclamation point, underlined. And it's going to be a large part of everything going forward. Unfortunately, the world is a dangerous place. And we picked that area that we can do everything we absolutely can do to make sure that our troops are protected and should we [indiscernible] we'll be able to be to deliver to our clients.

And following up on that, you referenced how software-defined radios have proven very strategic on the battlefield in Ukraine, drones being hit with electronic warfare attacks and GPS-guided missiles also being vulnerable and these software-defined radios are important in order to evade these electronic warfare attacks. You've discussed in the past how you've provided like very small form factor payloads onto Group 1 and Group 2 drones. Can you just discuss the Switchblade as it relates to size, weight and power? And like how you may be able to like shrink these software-defined radios to be deployed on to some of the smaller drones that are out there in the marketplace and are being used in Ukraine and the Red Sea and Israel conflicts?

Thanks. Look, I think it suffices to say that from small form factor to rack-mounted systems, together, we cover the complete expand. So from a size, weight power and processing power, we have that entire area of cover. Software technology on any platform -- the software technology is delivered and developed by CACI in the future as well from Azure Summit is applicable on any platform out there. And when I look at drones, look, we support a number of airborne assets. I'll just leave it at that. They do a wonderful job of collecting and assessing and direction finding and targeting and nulling. And whether that's drone based or potted systems, I think in the future, that's where you're seeing us stepping in to is that we have the right form factors, the right software technology, the right platform integration. But most importantly, we have folks who understand the mission. Because from the expertise side of our company, we're embedded with many customers who are working through those fights today. What makes us also more unique is having the expertise in forming technology as to what type of advancements our enemy is making and how can we quickly counter those. That's where the bread and butter is and that's where the money is being made. So thanks, Louie.

Next question comes from the line of Cai von Rumohr with CACI International.

Congratulations on a good deal. Can you give us a little more color on the financials? For example, what's the split between hardware and software? And where do they make their money? Do they make it on OE sales? Do they make it on aftermarket support? What's the split between fixed price and cost plus?

Cai, I can give you a little bit more. Look, they have a higher mix of fixed-price revenue, which really would lend you into the hardware and software technology side versus the cost-plus system development work. And you can see that in their margins. You can also see they have the ability to execute and deliver as well. So you don't take away a form of record from an A&D prime without improving ability to deliver. They run a really good business. So yes, a larger portion of their work is hardware, software technology. The same have been accurate that we talk about those areas are business that are out there growing. And then what I'd also share as part of this question is, they have a manufacturing capability with a lot of built-in automated tests as they produce some of their larger form factor business, and that's an additional synergy as we go forward looking at how do we bring that into play not only on large-scale programs such as Spectral but how we bring that need to play to provide additive manufacturing to some of our small form factor work. So higher on fixed price materially than under a cost plus side, and we would look for that trend to continue.

And then as a follow-up, you mentioned the synergies. Can you give us any quantitative -- what kind of order of magnitude could the financial synergies be by year 2? And secondly, are there any financial dis-synergies? You mentioned that they're a partner on Spectral. Are they a subcontracting partner? Or are they a full partner?

So there are a couple of questions in there, Cai. Let me first say, there are no -- just to generally address financial synergies, there are a de minimis amount of cost synergies. I mean, there is no -- this is not a cost-synergy-driven proposition thesis. In terms of revenue synergies, certainly, you've concluded from our remarks this morning that we see a number of opportunities, none of them are considered in our modeling or our valuation work. So we -- while we see a fair number of opportunities, they were not necessary to sort of economically structure the deal. Dis-synergies, a very small amount of negative synergy related to their work for us on Spectral, which is fully considered and baked into our model and in any numbers that we've talked to you about here today. But they were modest dis-synergies.

Yes, I'd also add. Look, there's this ability to cross-sell, we'll look at deeper into the customer insights that we both have. Clearly, we'd like to invest ahead of customer need for their technology base. When you're that sized company, you're stepping up that growth curve, you're winning a large program, you're showing a customer what you can perform. We can drive revenue higher than there's some of what we could have done separately. That's what we're really hungry about. But we got to get the acquisition closed first, kind of get to the integration phase, Cai. But clearly, that is one of the qualitative reasons and one of those down, down the road areas that we're very, very focused on.

So just to be clear, so the $440 million in revenues and $110 million of EBITDA are essentially stand-alone numbers for Azure?

Yes, that's correct. And I'd point out to you, Cai, and to others who may be listening and thinking about this, those are next 12 months. So that's not -- that goes beyond our fiscal '25. So when we give you our next round of guidance update following the close on our regular quarterly rhythm, you won't see exactly that number because it's 12 months. It's more than the balance of the fiscal year.

And our last question comes from the line of Ellen Page with Jefferies.

Just on Azure's growth from here, are there any large recompetes outstanding that we should be aware of? And kind of related to that, can you talk about any times that you would have bid directly against them in the past?

There are no near-term pending recompetes. I mean, pretty good visibility into their growth ramp on the handful of programs that we've referred to. I do not believe we have competed directly.

Yes. So a couple of areas. As I mentioned earlier, Ellen, they're on the same strategic path that we're on. I only say that because we're 3 to 4 years -- we've been active for 3 to 4 years longer. As they have looked to move up the curve from a Tier 2 supplier to a Tier 1 supplier, it's safe to say that they would have bid on programs that we were ramping up on. I'm not going to get into all the details, part of competing against each other is where you get to understand the depth and breadth of what another potential acquisition could be bringing to us. Somebody asked earlier on this call, that is where you also have always been listening and always been thinking that's what opportunistic does, that's what [indiscernible] does, that's what a strategic acquirer does. So yes, we have run into each other in the marketplace. Part of that, I know it's really cheesy, but there's times they have chocolate, we have peanut butter, said that a 100 times. It's really getting to the point where we could do so much more together, at the end of the day, to support our customers so much better with a pre-integrated solution allows us both to win as we go forward. So yes, we have seen each other in the marketplace in a very complementary way. But clearly, they do things that we don't do, that's why this is a great gap filling acquisition for us both in terms of capabilities and customer relationships.

That concludes the question-and-answer session. Mr. John Mengucci. I turn the call back over to you.

Thanks, Deseray, and thank you for your help on today's call. I'd like to thank everyone who dialed in or listened to the webcast on such a short, short notice for their participation. We know that many of you have follow questions, Jeff MacLauchlan, George Price and Jim Sullivan are available after today's call. Please stay healthy, and all my best to you and your families. This concludes our call. Thank you, and have a great day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.