Booz Allen Hamilton Holding Corporation (BAH) on Q3 2022 Results - Earnings Call Transcript

Operator: Good morning. Thank you for standing by and welcome to the Booz Allen Hamilton Earnings Call covering Third Quarter Results for Fiscal Year 2022. At this time, all participants are in a listen-only mode. Later there will be an opportunity for questions. I would now like to turn the call over to Ms. Laura Adams. Laura Adams: Thank you. Good morning and thank you for joining us for Booz Allen's third quarter fiscal year 2022 earnings announcement. We hope you’ve had an opportunity to read the press release that we issued earlier this morning. We have also provided presentation slides on our website and are now on Slide two. I am Laura Adams, Chief Accounting Officer and Interim Head of Investor Relations and with me to talk about our business and financial results are Horacio Rozanski our President and Chief Executive Officer and Lloyd Howell, Executive Vice President, Chief Financial Officer and Treasurer As shown on the disclaimer on Slide three, please keep in mind that some of the items we'll discuss this morning, will include statements that may be considered forward-looking and therefore are subject to known and unknown risks and uncertainties, which may cause our actual results in future periods to do differ materially from forecasted results. Those risks and uncertainties include among other things, general economic conditions, the availability of government funding for our company services and other factors discussed in today's earnings release and step forth under the forward-looking statements disclaimer included in our third quarter fiscal 2022 earnings release and in our SEC filings. We caution you not to place undue reliance on any forward-looking statements that we may make today and remind you that we assume no obligation to update or revise the information discussed on this call. During today's call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third quarter fiscal year 2022 earnings releases and slides. It is now my pleasure to turn the call over to our CEO, Horacio Rozanski. We are now on Slide four. Horacio Rozanski: Thank you, Laura and good morning, everyone. I hope that you and your families have been able to stay safe and healthy through the current COVID-19 wave and thank you for joining the call. Today, Lloyd and I will share our third quarter results in the context of our fiscal year 2022 guidance and our multi-year investment thesis. We will also describe the underlying dynamics of our business and the progress we are making on our Vault strategy. To set the context, let's go back to our October Investor Day, where we outlined our Vault strategy and associated goals. As a reminder, Vault stands for Velocity Leadership and Technology. It is a strategic program. Booz Allen has launched to capitalize on our first mover advantage in helping the federal government transform core missions through the use of new technologies. Over the next few years, we look to grow faster by building scaled physicians in critical areas, such as national cyber and digital battle space. We are in the early stages of this journey, but are already making strides, seeing strong progress. As part of Vault, we have set new multi-year financial goals that deliver both strong profit growth and continued investment in our business. Our investment thesis centers on growing adjusted EBITDA dollars from $840 million in year 2021 to $1.2 billion to $1.3 billion in fiscal year 2025. That's approximately a 50% increase. We expect this increase to be accomplished through 5% to 8% annual organic revenue growth, adjusted EBITDA margins in the mid tens and $3.5 billion to $4.5 billion in total capital deployment that prioritizes strategic acquisitions. Our expectations for fiscal year 2022 were consistent with these goals. Gross revenue growth in the 7% to 10% range and adjusted diluted earnings per share in the range of $4.10 to $4.30. We also said this fiscal year growth pattern would look different from recent years, with slower revenue growth in the first half and significant acceleration in the second half. As you saw in our press release, our bottom line numbers are on track with our expectations and we are reaffirming our guidance. Our revenue growth in the third quarter was lighter than we expected and while we forecast strong fourth quarter revenue growth, we're lowering our full fiscal year 2022 revenue outlook to account for a slower pace. Lloyd will take you through the quarter results on our updated guidance in greater depth. There were several factors that contributed to the revenue dynamics for the quarter. On the positive side, we continued to win the right kind of work and hire the right people as reflected in our backlog growth and headcount increases over the last 12 months. Conversely, the translation of those positives into revenue growth was slower than historical standards, driven by a number of factors, including a protractive continuing resolution, a higher dollar value of awards on their protest, delayed awards and slower ramp up on sold contracts, lower staff productivity due in large part to the Omicron variant surging during the quarter and lower than anticipated billable expenses. These dynamics impacted our entire portfolio and some pockets of our defense business were especially hard hit, due part to the number of larger work delayed and a greater proportion of billable expense in their revenue base. Looking ahead, we see some of these challenging dynamics continuing into the coming months. As a result, we are taking a three-pronged approach to proactively manage through this environment. First, we are addressing those business areas where we see the greatest funding uncertainty. Second, we are continuing to control costs in order to deliver in our commitments to both grow adjusted EBITDA and invest in our business. And third, we are doubling down on areas of significant growth opportunity, shifting resources across the portfolio, by leveraging our unique operating model and single P&L. In short, we continue to lean into growth while managing tightly in the face of greater market volatility. Before turning the call over to Lloyd, let me return to the longer term outlook and the progress we have made in our business so far. As we look ahead, we remain on track to deliver strong growth in adjusted EBITDA through fiscal year 2025, supported by continued revenue, growth, stable adjusted EBITDA margins, and strategic deployment of capital. Our confidence in the future is predicated in our belief that we have the right strategy and the proven ability to execute in both good times and challenging ones and several accomplishments from the last few months underscore these points. First, we continue to win the right kind of work at the center of national priorities where innovation can help the government transform the way the mission is executed. Our clients from the department of Veterans Affairs to the Air Force are looking to Booz Allen for expertise in areas such as DevSecOps, AI and the commercialization of new technologies to advance their missions. Second, we are making key investments that differentiate our service to clients. For example, last December, as part of our ramp up on national cyber, we announced the opening of our carrier grade 5G lab in Central Maryland. The lab offers a state of the art testing environment for secure cyber resilient 5G solutions. Similarly, as we advance our work on digital battle space, we are significantly expanding our footprint in Honolulu. This investment deploys into the INDOPACOM region, some of our most advanced capabilities to expand our support of several high priority client missions. Third, we are successfully using acquisitions as strategic accelerators, Liberty and Trace Point continue to deliver the strategic and financial value we expected. Integration is going well, and we are extremely pleased with the upside these acquisitions create and in addition, we continue to build our acquisition pipeline. And forth and perhaps most importantly, we continue to strengthen our team and ensure we have the focus and resiliency to support our clients as they too manage through a volatile environment. I am extremely proud of our workforce for achieving complete compliance with our COVID vaccination requirement. Our purpose and values are at the core of everything we do. So we believe that prioritizing the health and safety of all our employees is the right thing to do for our institution, our clients and our communities. Furthermore, a fully vaccinated workforce allows us to better serve our clients, supports safer in-person collaboration and is critical to entering a post pandemic phase. Together, always together, the people of Booz Allen are forging ahead with relentless focus in our client's missions and our growth strategy. This is what delivers the consistent results that create long term shareholder value. And with that, I'll give the floor to Lloyd for more details on the third quarter, the fiscal year and our investment thesis. Lloyd over to you. Lloyd Howell: Thank you, Horacio. As we near the end of fiscal year, 2022 a year marked by many twists and turns, we have continued to build on our underlying fundamentals, which have supported our expectations for second half performance outpacing first half. And while top line growth and cash did not deliver at the levels we anticipated, we are delivering the bottom line results we need to invest in our business and our people to achieve our long term growth initiatives. With three quarters now completed and greater visibility into the fourth quarter, we are seeing some transitory changes at the macro level that are impacting overall market performance. The expanding on what Horacio said, just as we believe that we were turning the corner on the pandemic's impacts and reverting to more predictable business patterns, we were hit by Omicron, which led to another spike in PTO resulting in staff utilization rates, not normalizing as we had anticipated. This coupled with an overhang effect from the continuing resolution has impacted our ability to convert strong demand into top line growth. We factored some of this uncertainty into our 2022 fiscal year guidance, but we did not fully anticipate the impact of a second wave on utilizing, nor did we foresee the delays in translating wins into revenue generation. I will get into more detail shortly when I give updated guidance. Now for the details of the third quarter, please turn to Slide five. At the top line, revenue increased 6.6% year-over-year to $2 billion, which includes approximately $117 million from inorganic contributions. Revenue, excluding billable expenses grew 6.2% year-over-year to $1.4 billion. Revenue growth was slower this quarter for the following three reasons. First funding delays resulting in slower ramps on new work and existing work. Second, lower staff utilization resulting from an uptick in PTO taken over the holiday period due in part to arise in COVID cases and the inclusion of the New Year’s eve holiday in this quarter's results. And third, billable expenses continue to be pressured by slower travel patterns and the timing of material purchases getting pushed to the right. Taken together, these factors are largely timing issues that we believe will dissipate as we return to more normal business rhythms. Now let me walk through the market level performance. Starting with defense, revenue declined by 2.2% year over year and has been trending down quarter over quarter. Since defence is roughly 50% of our business portfolio and largely comprised of cost reimbursable work, the macro factors and subsequent top line impacts I noted were especially impactful in this market. More specifically to expand on what Horacio said our army account was hit the hardest by some of these dynamics where our performance was impacted by budgetary challenges, slowness in ramp up and some losses. Going forward, our defense leadership is doubling down on addressing these issues by growing headcount, managing utilization and aggressively deploying talent to capture the value opportunities, including hypergrowth initiatives such as our digital battle space platform. In Civil revenue grew by 25.3% year-over-year of which 5.1% was organic, marking our second consecutive quarter of strong double digit growth. Our results reflect solid performance across the portfolio, particularly in health, where we see strong alignment with the administration's priorities, which are yielding important wins. Additionally, Liberty continues to strengthen our unique market position as we prepare to leverage integrated capabilities in the areas of cloud DevSecOps and API development to pursue additional market share across our broader portfolio. In intelligence, we recorded our second consecutive quarter of growth at 0.8% year over year. This continued improvement in performance reflects our ability to hire ahead of growing demand and capitalize on our mission expertise and advanced technological offerings to secure key recompetes and new work opportunities. This positions us for multiyear growth in key areas, including digital modernization, artificial intelligence, and high end data analytics. Lastly, global commercial revenue grew 26.7% compared to the prior year period. Performance was driven by growing demand in our US commercial cyber business and contributions from Tracepoint where we are seeing strong cross-selling momentum and early synergies. We are now on Slide Six. Net bookings for the third quarter were approximately $797 million up 29% over the prior year period, translating to a quarterly book-to-bill of 0.39 times and a trailing 12 month book-to-bill of 1.28 times. Total backlog grew approximately 19.2% year-over-year to $27.8 billion. Funded backlog grew 11.7% to $4 billion. Unfunded backlog grew 57.7% to $9.4 billion and price options grew 4.4% to $14.3 billion. These results underscore continued demand and strong alignment to our clients' core missions in the areas of artificial intelligence, cyber and digital modernization to name a few and further our position as a trusted partner and market leader. Looking ahead, as we continue to pursue larger and more technically complex bids, we anticipate that ongoing protest will become part of the normal business cycle, which we are increasingly factoring into our operating plan. Pivoting to headcount, as of December 31, we had approximately 29,500 employees, an increase of approximately 1900 year-over-year or 6.8%. The labor market for tech and tech adjacent talent remains highly competitive, but we are pleased that we continue to successfully execute on our hiring and retention strategies, a reflection of our appeal as an employer of choice. This resulted in a third consecutive quarter of mid-single digit headcount growth, consistent with our expectations. Moving to the bottom line, adjusted EBITDA for the quarter was $222 million up 8% from the prior year period. Adjusted EBITDA margin on revenue was 10.9% compared to 10.8% in the prior year period. The increase in adjusted EBITDA margin was driven by three factors. First, profitable contract level performance and mix, which includes inorganic contributions. Second, prudent cost management, and third, a return to billing for fee within Intel, which had a $2 million negative impact on the prior year period under the Cares Act, a tailwind that will taper off after this quarter. Third quarter net income decreased 10.8% year-over-year to $129 million. Adjusted net income was $137 million down 5.5% year-over-year. Diluted earnings per share decreased 7.8% to $0.95 from $1.03 the prior year period and adjusted diluted earnings per share decreased 1.9% to $1.02 from $1.04. Both GAAP and non-GAAP metrics were impacted by higher effective tax rate following the release of an income tax reserve of $10.2 million in the prior year period related to the Aquilent acquisition, as well as higher interest expense, partially offset by a lower share count due to our share repurchase program. Our non-GAAP metrics exclude certain acquisition costs and the non-cash gain of $7.1 million from the spinoff of SnapAttack during the quarter. Turning to cash, cash from operations was $21 million in the third quarter down from $233 million in the prior year comparable period. Operating cash performance is volatile a quarter to quarter and the decline this period was more pronounced due to some of the factors impacting top line growth, coupled with higher disbursements. As we have done before, we are focused on our working cash management and cash collection efforts to continue improving our operating cash performance and reinforce our strong balance sheet. Year to date, we have generated $481 million in operating cash flow and $430 million in free cash for a free cash conversion rate, nearing 100% supporting our strong balance sheet positioning and capital deployment priorities. Please turn to Slide Seven. During the quarter, we deployed approximately $139 million inclusive of $50 million in quarterly dividends and $83 million in share repurchases. Today we are also pleased to announce that the board has increased our quarterly dividends by $0.06 to $0.43 per share payable on March 2 to stockholders of record on February 11. This marks our ninth consecutive fiscal year of increasing our quarterly dividend, a testament to our fundamental strength and promise to continue growing our dividend even in a more challenging operating environment. With one quarter left in this fiscal year, we remain committed to a patient, disciplined capital allocation strategy, leveraging our strong balance sheet position to deploy capital in an accretive manner, creating near and long term shareholder value. As we have said in October, our capital deployment priorities remain focused on strategic M&A to enhance growth while sustaining a healthy dividend and opportunistically repurchasing shares. Let me now walk you through how the puts and takes from the quarter translate into updates to our full year fiscal 2022 guidance. Please move to Slide Eight. Despite lighter revenue and operating cash challenges this quarter, we are proud of our team's efforts to manage the business controlling what we can in spite of another wave of macro environmental challenges. These efforts have enabled margin expansion with solid ADIP's performance throughout this fiscal year as we reinforce the strength of our fundamentals and balance sheet in preparation to execute on our investment thesis. In the fourth quarter, we are laser focused on executing against our operational priorities. We will continue to aggressively hire ahead of demand capitalizing on our strong portfolio of new work opportunities to sustain long term organic growth. We will efficiently manage the business by investing in our people and technology to lead the next wave of innovation. And lastly, continue to build our M&A pipeline and acquire businesses that meet our disciplined criteria to serve as strategic accelerators. Our revised guidance reflects these efforts. In addition to the third quarter performance and trends I just outlined, let me run through the numbers. For the full fiscal year, revenue growth is now expected to be in the range of 5.7% to 7.2%. At the midpoint, our revised guidance range reflects $100 million to $220 million of revenues tied to the uncertainties we outlined earlier. They break down as follows. $30 million to $80 million tied to funding delays and resulting slowness in deploying staff unsold and funded work. $20 million to $40 million tied to an incremental step down in staff utilization due largely to the continuing pandemic in PTO usage and $50 million to $100 million from lower pandemic related travel and the timing of materials purchase getting pushed to the right. As a reminder, the inclusion of the New Year’s Eve holiday and minor differences in the costing of labor related to the implementation of our NextGen financial management system will become tailwinds in the fourth quarter, adding roughly 175 basis points to the top line. On the bottom line, we now expect adjusted EBITDA margin for the fiscal year to be approximately 11%. This increase reflects our considerable control over our cost structure and margin levers even in times of uncertainty. We are reaffirming our adjusted diluted earnings per share guidance to be between $4.10 and $4.30. The a ADIP's guidance is based on an effective tax rate of 22% to 24%, $134 million to $137 million weighted average shares outstanding and interest expense of $92 million to $95 million. We now expect operating cash to be between $700 million and $750 million. The incremental step down follows our expectations for lower top line growth and accounts for the $56 million of one time payments in connection with the Liberty acquisition, which we had anticipated, being able to make up through a combination of working capital management and operating performance. As I mentioned, we will remain laser focused on optimizing our working capital to return to the strong level of cash version we have historically delivered to position us ahead of future growth initiatives. And finally, we continue to expect capital expenditures to be between $80 million to $100 million. As we move towards our investment thesis, I remain confident in our team's ability to manage through these times of uncertainty as we have proven our ability to do over the years. We will continue to execute on our near term growth objectives and remain competent in the long term trajectory of the business, upholding our role as the industry leader and meeting the high standards our shareholders have come to expect. With that over to you, Laura. Laura Adams: Thank you, Lloyd. Operator, please open the line. Operator: Our first question comes from Sheila Kahyaoglu with Jefferie. Your light is open. Sheila Kahyaoglu: Good morning, Horacio, Lloyd, Laura. Thank you. Horacio, you stated you're addressing business areas with the greatest funding uncertainty and Lloyd, you mentioned efforts within defense and the army specifically. Defense remained down 2% in the quarter. How do we think about specifically within that decline and what are the other areas leading to that pick up decline and how do you think about the return to growth there? Horacio Rozanski: Hey, Sheila. Good morning. Thanks for the question. I think to put things in context as we mentioned in the prepare remarks, the volatility in the market driven by both COVID and then some funding issues, both with the CR and just some slowness in terms of getting funding on contracts is affecting our portfolio and particularly affecting our defense business. And we're not going to try to predict the precise timing on when those issues are going to abate. Instead we are really working through them. If I take a step back, our -- I would say, as a firm and certainly in our defense business, we are on strategy and the fundamentals are actually strong. If you look at the work that we're winning and you can see the backlog numbers and then the record backlog and the increases in funded backlog, they tell a really good story about that and the quality of the work underneath that is very, very strong. We're hiring strongly across all of our markets, including defense, and we are managing through this volatility to deliver on the investment thesis. So the job for all of us and in our defense portfolio is first to address these performance issues that we have in certain pockets of the business. Lloyd talked about our army business that's been hard hit by some of these dynamics and we are doing that. We need to control costs and we are doing that and you see that in our bottom line numbers across the entire business, to make sure that we are delivering on this adjusted EBITDA dollar targets that we have in our investment thesis. And then importantly, we need to double down on growth and in the defense portfolio, there are some really strong areas of growth around some of our classified work, around some of our space work and around digital battle space and all things related to the digital transformation of the department, both at headquarters and at the edge. So, I look at all of that and, and accepting and managing through the near term volatility, I think that in the medium term, we are very much on track to continue to be the leader and to continue to grow. Sheila Kahyaoglu: No that's super helpful. And then maybe one more broadly, you guys have been the growth leaders in this space. There's no doubt about that. But organic growth revenue implied for fiscal 2022 is more in the right of 2% to 4% and below your 5% to 7%, '23 to '25 target. So how do we kind of think about this reac acceleration to mid-single digit growth and the implied high single digit organic growth guidance for Q4? I know you addressed a lot of these during your Analyst Day too. Horacio Rozanski: Yeah. Lloyd, do you want to start and then I'll… Lloyd Howell: Yeah, I'll start. So Sheila, as we said, our prepared remarks, it's a combination of three factors that have us in that 2% to 4%, the funding delays, the lower staff utilization and lower billable expenses. That being said, we're laser focused on the things that are in our control. We said that our operational priority was bringing in talent and we're doing that 3.6 year over year, organic and 6.8 year-over-year overall. We're winning work. Our backlog is up 19% year-over-year. Latest our trailing 12 months at 1.28 times. So we're winning work that we want to win. We're engaged with our clients on topics that are forward leaning, but we do face these challenges and we feel that the path through this volatility is really to focus on the things that are in our control, which is winning work and hiring the best talent. Operator: Our next question comes from Gavin Parsons with Goldman Sachs. Your line is open. Gavin Parsons: Guys, I appreciate all the detail and the revenue headwinds and all the color and everything you've said, but I'm kind having dejavu to 3Q of last year and we've delays and procurements toward slippage, pullback and funding, etcetera. I appreciate COVID has persisted much longer than any of us would've thought, but basically been over a year now where you haven't grown organically. So I'm just curious, how do you get confidence that there isn't actually a structural change in customer behavior and the way they're thinking about spending? Horacio Rozanski: Gavin? I appreciate the question and here's what I would say. First of all, I talk to a lot of clients about this, and when I listen to them about where their mission priorities are, what we are doing and how we're aligned to that, I feel very strongly that, like I said, we're on strategy and underlying fundamentals are good. Typically in our business, as you know, if you take headcount growth from some level of wage increase that gives you a sense for how much we're going to grow and especially if we're not demand constrained and you can see the backlog numbers, we're not. So we have confidence that in the, I call it the medium term we are in very good shape positioned to continue to grow and to be the growth leader in the market. And we are, I think we've come to terms with the reality that there there's more volatility and more unpredictability in some of these -- some of these variables around COVID and around funding that perhaps we anticipated, but put all together. I go back to the point that Lloyd made, which is the underlying fundamentals in the business are strong. We're focused on them. And we're focused on delivering at the bottom line where we have control over the cost structure to make sure we deliver our investment thesis. Lloyd Howell: Kevin, I would just add like yourself. I had a dejavu moment as well, because many of the dynamics that we were grappling with a year ago and we're still grappling with. I think, we expected that in early October, things were going to open up again along, came Omicron and definitely had an impact on our workforce. We expected that this far into the administration that things would start to flow, but we're still seeing slowness and ramp up and, and kicking off things, and that's just the environment we're in now. We're not making excuses. Like Horacio and I have said, we are focused on the operational items that are in our control. It's playing out with strong bottom line results which we're very proud about but we're going to have choppiness at the top line and we're just going to keep staying on strategy and executing as well as we have up to this point. Gavin Parsons: I appreciate that insight. That definitely feels like the need is there and the budget is already there too so. And maybe on margins, just kind of continuing to outperform there. You obviously, the longer term investor day target is 10.5, I think you've got tailwinds from mix shift and cost containment that you outlined at the Investor Day, partially offset by investment growth. Are you managing to a 10.5% number or is there upside to that if you can kind of continue to outperform on makeshift and cost containment? Lloyd Howell: Yeah, we're not managing to mid 10s. In fact we're very pleased with 10.9% for this quarter because really, it speaks to our operational performance, our discipline around cost control and solid fundamentals and we have an expectation of ourselves to continue that going forward. The raise to approximately 11% is a reality of that, that we're seeing really good mid shift in terms of our contract types. The discipline that we've had we're going to stay focused on that as well as the core business fundamentals that we've talked about and given that volatility that we're experiencing. So that's what we're moving to. That's why we're confident about around been for the full year. But it's really the fundamentals that we've been focused on that's gotten us to 10.9% at this point. Operator: Thank you. Our next question comes from Colin Canfield with Barclays. Your line is open. Colin Canfield: So growth in substance pretty well documented at this point, trading you to services names. Can you just talk about how this is impacting the valuation of your M&A pipeline, both on kind of a public and private basis? Horacio Rozanski: I'll start you know, we are seeing continued growth in our M&A opportunities in the functional areas that we're emphasizing cyber security, data analytics, system software development and engineering and science, still mid to I mean small to mid-size opportunities. We're having strong -- with our strong balance sheet and capacity, we're not seeing valuations in these particular areas spike, but keep in mind, we're also doing a better job in terms of cultivating the opportunities based on the relationships, we have based on knowing the industry as well as we do and I think that has in some ways insulated us from what we see more broadly with some of the elevated valuations should it go into an auction, but up to this point, we haven't seen a spike in valuation. Colin Canfield: Got it. And then going back to your comment at the start Horacio, you mentioned scaled cyber you just update us on where Booz Allen Hamilton stands in terms of scale and kind of where scale matters the most and in terms of your underlying business areas. Thanks. Horacio Rozanski: Sure. I think you you've heard me say this in the past. I actually really like our positioning throughout the portfolio. Across all three of our major market areas we've deployed our innovation agenda and positioned ourselves strongly as players in all of these key technologies from, we we've talked before about the fact that we've been ready as having the largest cyber workforce in North America, the strongest AI footprint in DOD some of the work we're doing about 5G these days is both breakthrough and growing. And we are looking to invest in areas like INDOPACOM as I mentioned, the prepare remarks and continuing to work the intersection of, for example, AI, 5G and cyber, which we believe will drive another wave of growth. And from a scale standpoint, we spent the last really decade. I'm asking a talent base that actually gives us a lot of flexibility to go into this areas and to really focus on where the growth it's going to be. So, that we Lloyd mentioned our civil portfolio for example, is that very strongly. We're very well aligned to the domestic agenda for the country. And we look forward to continuing to grow well there while we pursue on growth also in defense and in intelligence. Operator: Thank you. Our next question comes from Matt Akers with Wells Fargo. Your line is open. Matt Akers: Hi, good morning, everybody. Thanks for the question. Could you just touch on your recent spin out of Mozi and Snap Attack? Why are those businesses sort of are off outside of Booz and are there any other parts of your business that you're looking to potentially buy back? Horacio Rozanski: Sure. I'll start, I think I go back to Vault and this notion of Velocity, and that is informing a lot of our thinking about how we want to manage the portfolio going forward and honestly, in both directions. So with Liberty and with Trace Points, we made two acquisitions that are really good accelerators for our growth, and they're playing out frankly above our expectations at this point. And we're very pleased, not just with the financial returns that they're driving but with the strategic positioning that they're allowing. By the same token, as we looked at the entire portfolio in some of these areas, we created solutions and we have unique IP. We asked ourselves if we were the right player by ourselves to capitalize on the growth in those commercial markets and we came to the conclusion that those businesses would grow better, faster with a different investor base and with partners, we remain involved as minority owners in those businesses because we believe in them and we're excited to see where that will take us and frankly, we're learning a lot about how to both, make venture investments and the minority partners in these fast growing entities and then how do we take advantage of all of that IP and those market positions that are getting created to drive growth into the core of our defense Intel and civil markets and again, I think the future is bright on that front. Matt Akers: That's great. Thanks. And then, I guess maybe once for Lloyd, just on the free cash flow guidance change and I know you mentioned kind of the lower top line, but I think the EBITDA kind of dollars guidance is not that different. Is it more just a collections timing kind of thing, or any more kind of detail you could give there? Lloyd Howell: Yeah. Matt, cash definitely was lighter due to some of the headwinds we talked about in revenue, but specifically around cash, we had lower collections. Some of that was just due to revenue being a little bit lower funding delays, the near celebration falling Q3. The same time we had higher disbursements and payroll expense. So, the incremental impacts about $35 million of collection slipped increase in payroll expense. That being said we're still focused on a 100% cash conversion for the year. And I also sort of offer the following context, this year we had the Liberty acquisition as well as added interest from the June bond issuance and that's kind of offset some of the operational improvements that we've made. And that being said, as you heard in my prepared remarks, we're laser focused on this. We expect it to improve going forward as we sort of work through these near-term headwinds, if you will. Operator: Thank you. Our next question comes from Cai von Rumohr with Cowen. Your line is open. Cai von Rumohr: Yes, thanks so much. So, as you probably know the was down about 3% to 4% for the quarter itself. So are you seeing any signs that this bookings environment that's been so slow, are changing in any way. And secondly, what about protests? How big are they and, any expectation that some of those things are going to be adjudicated? Horacio Rozanski: Cai, I can start. I think we, as we mentioned in our defense business, we have seen some slow down on some booming to the right. On some contracts, some slower ramp-up and our overall protest backlog, if you will, or the amount of under protest that therefore is not in our backlog is at an all-time high. Having said that, things are moving along, as I said, clients do have the urgency. And so I think over time, some of these will normalize, we're certainly watching closely the, the CR has affected our defense business more than we would have expected and to a degree. I worry about that, but I frankly worry about the impact of the share-on mission and then compounded by the, the COVID PTO and the fact that that Omicron drove a, again, a record number of cases inside Booz Allen. All of that is the volatility that we are talking through, but I take us back to the underlying fundamentals. We are focused on the things our clients are focused on. They are, our backlog is strong, our Book-to-bill for the last 12 months is strong and we're hiring the right people. So we believe that over time, some of these will normalize and we're going to continue focusing on the things we can control. Lloyd Howell: Hey Cai, I would just add that for the most part, our Book-to-bill pattern is consistent, 0.3, nine times for this quarter is comparable to what we saw last year at this point. And in trailing 12 months of 1.28 to Tracepoint. We feel is pretty plenty strength and demand signal. We are still going to see volatility though, some of these larger procurements as they come through, depending upon protest resolution timing which certainly is moving all over the place, is going to continue to impact the traditional pattern of our Book-to-bill. But we're winning incumbent work at 90%, new work to grow 60%. So, on the demand signals, we, we're still feeling pretty good. 0 Cai von Rumohr: Thanks so much. And one on the receivables, your DSOs were high at the end of the first quarter, because you implemented the ERP system. They improved in the second and now they spiked up to about 73 days. That is basically I think, a sector high. What do you – what -- why is it that bad and what are you doing to make it better? And where do you think you can get? Lloyd Howell: Yeah, we to, I think Matt's question we're focused on, getting it down. It's a function of really being diligent and disciplined on collections; really continuing to balance that out with our disbursements. And the team's on it. Cash will be volatile, in this current environment, but we expect to see improvement it going forward. So, no excuses we're on it. And I expect that we'll, we'll do better going forward. Operator: Thank you. Our next question comes from Matt Sharpe with Morgan Stanley. Your line is open Matthew Sharpe: Horacio and Lloyd, good morning gentlemen. On the M&A front, just given the shorter cycle nature of your current business mix and sort of the sensitivities to budget disruptions. Is there any desire to either acquire Companies with relatively deeper backlogs or somewhat longer cycle business models and then related to that, how has the Liberty IT acquisition fared in this CR environment in the, in the surge in COVID 19 cases? Lloyd Howell: So, I, I think looking at our M&A strategy, it's consistent with Vault and with all the things that we have said, we're looking to deploy between $3.5 billion and $4.5 billion between now and 2025, with a focus on things that can be strategic accelerators for us. So are there positions technologies, unique opportunities to move faster, to develop things faster Liberty and Tracepoints were really good examples of that. And we're building a pipeline of opportunities that really mirrors that it's either a unique technology or a technology mission intersection that really accelerates on our priorities. And especially around either national cyber or digital battle space, we're going to be very diligent and very assertive in terms of generating that pipeline. Liberty is done, very well since the acquisition. It's, it's a good, the integration is going well. The teams have found lots of points of touch, where we are working together, both in their core markets around health and beginning to expand across other parts of our portfolio from a COVID CR. And so forth, they reflect the rest of the business and they are because they're more civil oriented, they're seeing more of the dynamics that we see in the civil market, as opposed to the, the, the more difficult dynamics we saw most recently in defense. But I think they're, again, they're a great team. They're a great acquisition for us and they're a pattern for us to continue to follow. I -- they don't have much to add, but your question around sort of backlog to right ride through some of the, the short term cycles, obviously when we're doing due diligence, it's a variety of areas we're looking at - talent, pipeline positioning, you name it. So it's certainly in the mix, but to Tracepoint, we're not leading with that. It's still, is it on strategy, our confidence on integration it's adherence to Vault and achieving of our updated investment thesis. But yeah, for sure, we're looking at what upside do does a Company have strengthen their talent and the list goes on and on. Matthew Sharpe: Got it; and then I just want to touch on a recent win you had with, with this the thunder do zero trust environment prototype. What does the path forward for that program or, or that contract look like for booze beyond the prototype days in and while the award itself was seemingly modest there is certainly touted as a fairly significant step forward for, for zero trust. So just any thoughts on that contract and it's path forward itself, and then more broadly on zero trust in the opportunity associated with it. Horacio Rozanski: I think it's a, obviously, we're, we're very pleased with both the, the win and the opportunities ahead. And I think to put it in context, right, it, it hits right at the intersection of the, of the type of work we want to do where we're driving, leading edge thinking and leading edge capabilities. We have demonstrated leadership on zero trust across both our commercial and our federal markets. And that is translating into wins across the portfolio. We are excited that we're beginning to see that not just in, more of our, the traditional places where we want that work, but allowing it to to expand further. So I'm as I, I said at the top of the call, we are on strategy, we're winning this kind of work that has great opportunity for us to, expand, to go forward and to help the department and more broadly the federal government transform missions through the use of new technologies. That's what we're all about. And that's what we intend to do. Operator: Thank you. Our next question comes from Seth Seifman with JP Morgan. Your line is open. Seth Seifman: Okay. Thanks very much. And good morning everyone. I think I, I hadn't quite appreciated maybe the contribution that Tracepoint was making in, in the quarter. And, and so I saw how much the acquisition revenue went out from Q2 to Q3. Can you kind of break out what was what was Liberty versus what was Tracepoint ? Lloyd Howell: Yeah, Liberty was a little over a hundred million it's ahead of our annualized Tracepoint north of 300, probably less than 350 Tracepoint added 12 million. So we're pleased with how well both integrations are going really winning new work already head of pace, great integration with both Companies. So, those things I think are definitely contributing to the financial outcomes and contributions we're seeing. Seth Seifman: Right. Okay. And then if we, if we assume that those are at a similar pace in the, in the fourth quarter, it, it implies a decent size step up in the sales, excluding those acquired businesses and, we'll still have a CR in place for half a quarter and still have, an situation here in I think starting to see some folks come back to the office, including here in New York, but still have some of this disruption. And so I guess, a kind of, what, what gives you confidence about that as we think about what the base of sales is going to be for 2023 growth, and then, given just the near term chops in the environment how should we think about maybe the initial growth rate for, for fiscal '23 versus the versus the longer term target? Lloyd Howell: Yeah, I mean, Seth, we're not going to get into me giving guidance for '23, but I will say normally at this year when we're updating guide guidance, I'm narrowing it. And I think because of many of the factors that are contributing to the volatility I think it's a pretty obvious it it's a challenge to do that. So with the headwinds that we articulate that we're working, on with the range of five, seven to seven two we feel pretty confident that we're going to end up in that range. And it really points back to what we need to continue to be focused on, which is bringing the talent and getting them utilized is as fast as possible. And I think those fundamentals gives us confidence that we're going to build the momentum in Q4, and it's going to carry over into '23 as to what that range in '23 is going to be let me get to that in May, but at this point we're feeling good about our guidance for this fiscal year. Horacio Rozanski: Yeah, Seth, if I would just come back to the, the point that we are very focused on the fundamentals and of the things we can control. We are trying to drive strong growth in the areas where the opportunities are still there. We are hiring the right people, we're winning the right work, we're managing costs. And ultimately we are committed to working hard to drive against our investment thesis and to implement Vault. And I think on that note we are, we're well positioned to continue to drive growth. Operator: Thank you. Our last question comes from Robert Spingarn with Melius Research. Your line is open. Robert Spingarn: Well, good morning. Without asking about fiscal '23, I thought I'd maybe take another angle of this, but Lloyd, you said the funding delays were about a $30 million to $80 million pressure, in the guide down, I'm assuming Q4 pressure. If we annualize that or extend, is that a fairly good proxy for what happens if the CR goes the full fiscal year? Lloyd Howell: I wish -- I wish I could do that, but I think if anything, we've learned over the last two years, speculating on that isn't a great move, like we're playing the game for what we can see and then chipping away at it to get the successes. We had growth in the second half, we are growing and it's really back to the fundamentals that are giving us strong bottom-line performance. But this is here to stay and, and we're on top of it or that great team pointed out this prepared remarks and everyone's pulling as hard as they can. I'd also remind you that, that what we did share is that we are focused on EBITDA dollar growth as a part of our investment thesis, and we believe we're on track to deliver on that. Horacio Rozanski: Yeah, I'll just would stomp the, a point that Lloyd is making -- we are focused on growth and we are driving growth. And while we accept the volatility in the market and we're going to work through it, we are not pulling back from our desire and our ability to, to drive. Obviously if the CR clears that'll be better than if it doesn't, but we are single manly focused on driving this business Robert Spingarn: Well, while Horacio on that note. And this is either for you or for Lloyd, but I I'm going to imagine, you took a close look at the NDAA and the plus ups there, and while maybe little greater for the investment accounts than for how do we think about Booz's benefit from those plus up when we finally get them? Horacio Rozanski: I think they play to a lot of our strengths. I, if you look at it, there's elements of that that that will strengthen our ability to, to deploy in Cyber 5G, AI Cloud, and even Quantum. So these are all areas that where we believe we built a unique position of leadership and this is why we keep coming back to the fundamentals are strong. And, we don't find ourselves in that sense demand constraint the speed at which these wins get on contract. And then we can put people against them where the, the near-term challenges reside. But, but when you look beyond that, we are aligned with the key priorities of the department and excited to support them. Robert Spingarn: Is it, an overreach for me to try and ask you to quantify, out of that $25 billion, $30 billion, what piece of that either Booze or the Government services community can access? Horacio Rozanski: I'm not sure that, that we can do that and as a lot of our work is integrated in a way that it doesn't sit on one specific line item. It really is around our, our support on these core missions. And again, if you look at the missions that are being highlighted and the, the, the type of work that we are winning, that we are doing I, I would point to the fact that there's great convergence of both of those. Operator: Thank you. And there are no further questions at this time. I'd like to turn the call back to Horacio Rozanski for closing remarks. Horacio Rozanski: I'll be brief because we went a little over time. Thank you all for your questions and for joining us this morning I hope this discussion gave you a deeper understanding of the dynamics that are underlying our performance and how we are managing through them. And as a result, why we are confident that we can deliver in both near and long-term financial goals, and that's driven by three things we believe we have the right strategy. We have a track record of performance, and most importantly, we do have a great team and with thank you again, stay safe and have a great day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect everyone. Have a great day.
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Booz Allen Hamilton Holding Corporation (NYSE:BAH) Financial Performance Analysis

  • Booz Allen Hamilton's ROIC of 17.85% significantly surpasses its WACC of 5.09%, indicating efficient capital utilization.
  • Compared to peers, BAH's ROIC to WACC ratio of 3.50 showcases its superior return on invested capital.
  • While competitors like Leidos Holdings, CACI International, and SAIC also generate returns above their cost of capital, BAH leads in efficiency.

Booz Allen Hamilton Holding Corporation (NYSE:BAH) is a management and information technology consulting firm, primarily serving the U.S. government in defense, intelligence, and civil markets. It competes with firms such as Leidos Holdings, CACI International, and Science Applications International Corporation, offering similar consulting and technology services to government and commercial clients.

In evaluating Booz Allen Hamilton's financial performance, the Return on Invested Capital (ROIC) is a key metric. BAH's ROIC stands at 17.85%, which is significantly higher than its Weighted Average Cost of Capital (WACC) of 5.09%. This results in a ROIC to WACC ratio of 3.50, indicating that BAH is generating returns well above its cost of capital.

When comparing BAH to its peers, Leidos Holdings has a ROIC of 14.48% and a WACC of 6.37%, resulting in a ROIC to WACC ratio of 2.27. This shows that while Leidos is also generating returns above its cost of capital, it is not as efficient as BAH in doing so.

CACI International, another peer, has a ROIC of 8.62% and a WACC of 6.11%, leading to a ROIC to WACC ratio of 1.41. This suggests that CACI is generating returns above its cost of capital, but at a lower efficiency compared to BAH.

Science Applications International Corporation (SAIC) has a ROIC of 12.41% and a WACC of 5.24%, resulting in a ROIC to WACC ratio of 2.37. While SAIC is performing well, BAH's higher ratio indicates superior capital utilization.

Booz Allen Hamilton Holding Corp (NYSE:BAH) Insights and Financial Overview

  • CEO Horacio Rozanski's significant stock purchase of 23,800 shares at $84.66 each, increasing his total ownership to 687,745 shares.
  • The Q2 2026 earnings call on October 24, 2025, provided insights into the company's financial performance and strategic plans.
  • Current trading price of $82.82 with a yearly high of $190.59 and a low of $82.23, indicating significant stock price volatility.

Booz Allen Hamilton Holding Corp (NYSE:BAH) is a management and information technology consulting firm, primarily serving the U.S. government in defense, intelligence, and civil markets. Competing with giants like Accenture and Deloitte, the company has recently seen significant actions from its CEO, Horacio Rozanski, who made a notable purchase of 23,800 shares at $84.66 each, increasing his total ownership to 687,745 shares.

The recent Q2 2026 earnings call on October 24, 2025, was a pivotal event for Booz Allen Hamilton. This call, featuring top executives including Rozanski, provided a platform for the company to discuss its financial performance and strategic plans, offering insights into its future direction.

Currently, BAH is trading at $82.82 on the NYSE, experiencing a slight decrease of 0.01% today. The stock's trading range for the day has been between $82.23 and $85.04. Over the past year, BAH has seen a high of $190.59 and a low of $82.23, indicating significant volatility in its stock price.

Booz Allen Hamilton's market capitalization stands at approximately $10.35 billion, reflecting its size and influence in the consulting industry. The trading volume today is 2,383,592 shares, indicating active investor interest which can impact the stock's price movement and overall market perception.

Rozanski's recent stock purchase and the company's strategic discussions during the earnings call highlight Booz Allen Hamilton's commitment to growth and shareholder value. Investors and analysts closely monitor these developments to assess the company's future performance and potential investment opportunities.

Booz Allen Hamilton (NYSE:BAH) Faces Challenges Despite Growth in National Security Portfolio

  • Booz Allen Hamilton's stock dropped 8.6% after reporting disappointing fiscal Q2 2026 earnings, missing expectations with an adjusted profit of $1.49 per share on sales of $2.9 billion.
  • The company's GAAP earnings fell to $1.42 per share, a 53% decrease from the previous year, attributing weak results to a "continued funding slowdown."
  • Despite challenges in the civil business, Booz Allen's national security portfolio showed solid growth, with the stock currently priced at $91.40, reflecting an approximately -8.86% decrease.

Booz Allen Hamilton (NYSE:BAH) is a management and information technology consulting firm, primarily serving the U.S. government in defense, intelligence, and civil markets. The company competes with firms like Accenture and Deloitte. On October 24, 2025, Stifel Nicolaus set a price target of $106 for BAH, suggesting a potential upside of 15.97% from its trading price of $91.40.

Despite this optimistic outlook, BAH's stock experienced a significant decline, dropping 8.6% by late morning after reporting disappointing fiscal Q2 2026 earnings. The company reported an adjusted profit of $1.49 per share on sales of $2.9 billion, missing expectations of $1.51 per share on nearly $3 billion in sales. This miss contributed to the stock's decline.

The company's GAAP earnings fell to $1.42 per share, a 53% decrease from the previous year. Adjusted earnings saw a decline of less than 18%, while revenue decreased by 8%. Booz Allen attributed these weak results to a "continued funding slowdown," which was not related to the government shutdown that occurred after the quarter ended.

Despite these challenges, Booz Allen's national security portfolio showed solid growth. However, the civil business faced difficulties, contributing to the overall downturn. The stock for BAH is currently priced at $91.40, reflecting a decrease of 8.89 points or approximately -8.86% in percentage terms. During the trading day, the stock reached a low of $88.12 and a high of $96.13.

Over the past year, BAH's stock has seen a high of $190.59 and a low of $88.12. The company's market capitalization stands at approximately $11.26 billion. The trading volume for the day is 8,341,547 shares on the NYSE, indicating significant investor activity following the earnings report.

Booz Allen Hamilton (NYSE:BAH) Receives New Price Target from UBS

  • Gavin Parsons from UBS sets a new price target for Booz Allen Hamilton (NYSE:BAH) at $119, indicating an expected increase of about 8.74%.
  • Booz Allen reports a mixed first-quarter fiscal 2026 performance with EPS increasing by 7.25% to $1.48, but revenue slightly declining by 0.6%.
  • The company's fiscal year 2026 EPS is projected to be between $6.20 and $6.55, with concerns over revenue dips and weaker backlog metrics clouding the outlook.

On July 28, 2025, Gavin Parsons from UBS set a new price target for Booz Allen Hamilton (NYSE:BAH) at $119. At the time, the stock was trading at $109.44, indicating an expected increase of about 8.74%. Booz Allen Hamilton is a management and information technology consulting firm, competing with companies like Accenture and Deloitte.

Booz Allen recently reported its first-quarter fiscal 2026 results, showing a mixed performance. The company's earnings per share (EPS) increased by 7.25% to $1.48, surpassing the Zacks Consensus Estimate by 1.4%. Despite this positive earnings report, the stock price has remained unchanged since the announcement, currently priced at $107.76.

On the revenue side, Booz Allen experienced a slight decline of 0.6%, bringing in $2.92 billion, which was 0.5% below the consensus estimate. The company's total backlog increased by 10.7% to $38 billion, but the funded backlog and book-to-bill ratio saw a year-over-year decline, raising concerns about future growth.

Looking forward, Booz Allen's fiscal year 2026 EPS is projected to be between $6.20 and $6.55, with revenue growth expected to range from 0% to 4%. The company also anticipates generating free cash flow between $900 million and $1 billion. Despite the positive earnings performance, concerns over revenue dips and weaker backlog metrics have clouded the fiscal 2026 outlook.

The stock has fluctuated between a low of $107.11 and a high of $112.69 during the day. Over the past year, BAH has reached a high of $190.59 and a low of $98.95. The company's market capitalization is approximately $13.37 billion, with a trading volume of 1,063,373 shares on the NYSE.

Booz Allen Hamilton Holding Corporation (NYSE:BAH) Earnings Preview

  • Booz Allen Hamilton is expected to report a 5.1% increase in EPS, indicating positive growth.
  • Revenue is projected to reach approximately $2.95 billion, with a slight anticipated decline.
  • The company's debt-to-equity ratio is high at 4.21, but it maintains a strong current ratio of 1.79.

Booz Allen Hamilton Holding Corporation, listed on the NYSE as BAH, is a management and information technology consulting firm. It provides services primarily to the U.S. government, including defense, intelligence, and civil markets. The company competes with other consulting firms like Accenture and Deloitte. Booz Allen Hamilton is set to release its quarterly earnings on July 25, 2025, before the market opens.

Wall Street analysts estimate Booz Allen Hamilton's earnings per share (EPS) to be $1.46, while the Zacks Consensus Estimate suggests $1.45. This marks a 5.1% increase from the previous year, indicating positive growth. Over the past 30 days, analysts have revised the EPS estimate upward by 0.3%, reflecting a positive reassessment of the company's performance.

The company's revenue is projected to reach approximately $2.95 billion, although a slight decline of 0.1% to $2.94 billion is anticipated for the quarter ending June 2025. Despite this, Booz Allen Hamilton's price-to-earnings (P/E) ratio of 15.72 suggests a reasonable market valuation of its earnings. The price-to-sales ratio of 1.20 indicates how much investors are willing to pay per dollar of sales.

Booz Allen Hamilton's enterprise value to sales ratio stands at 1.48, considering its debt and cash. The enterprise value to operating cash flow ratio is 17.56, reflecting the company's valuation in relation to its cash flow from operations. The company's earnings yield is 6.36%, indicating the return on investment for shareholders.

The company's debt-to-equity ratio is notably high at 4.21, showing a significant reliance on debt financing. However, with a current ratio of 1.79, Booz Allen Hamilton demonstrates a strong ability to cover its short-term liabilities with its short-term assets. The upcoming earnings report could influence the stock's price movement, with management's discussion playing a crucial role in determining future projections.

Booz Allen Hamilton's Strategic Expansion in Venture Capital

  • Booz Allen Hamilton (NYSE:BAH) upgrades its venture capital commitment to $300 million, aiming for growth and innovation.
  • The stock price of Booz Allen Hamilton is currently at $109.32, with minor fluctuations indicating market volatility.
  • Booz Allen's market capitalization stands at approximately $13.56 billion, showcasing its significant industry presence.

Booz Allen Hamilton, trading on the NYSE under the symbol BAH, is a management and information technology consulting firm. The company provides services primarily to the U.S. government in defense, intelligence, and civil markets. Booz Allen competes with other consulting giants like Accenture and Deloitte. Recently, William Blair upgraded NYSE:BAH to an "Outperform" rating, with the stock priced at $109.32 at the time of the upgrade.

Booz Allen's recent decision to triple its venture capital commitment from $100 million to $300 million highlights its strategic focus on expanding its influence in the venture capital space. This move aligns with the company's efforts to enhance its capabilities and adapt to the evolving market landscape. The increased investment could potentially drive future growth and innovation for Booz Allen.

The stock price of NYSE:BAH is currently $109.32, showing a slight decrease of 0.01%. Today, the stock has fluctuated between a low of $108.76 and a high of $110.70. Over the past year, BAH has experienced a high of $190.59 and a low of $98.95. These fluctuations indicate the stock's volatility and the market's response to Booz Allen's strategic decisions.

Booz Allen's market capitalization is approximately $13.56 billion, reflecting its significant presence in the consulting industry. The company's trading volume on the NYSE today is 1,429,058 shares, indicating active investor interest. This level of trading activity suggests that investors are closely monitoring Booz Allen's performance and strategic moves, such as its increased venture capital commitment.

Booz Allen Hamilton Holding Corporation's Financial Overview and Outlook

  • Earnings Per Share (EPS) of $1.61, surpassing the estimated $1.59, indicating a positive trend in financial performance.
  • Revenue of $2.97 billion fell short of the estimated $3.16 billion, missing the Zacks Consensus Estimate by 1.50%.
  • Projected adjusted EPS for fiscal 2026 between $6.20 and $6.55, with revenue expectations ranging from $12 billion to $12.5 billion, below analysts' forecasts.

Booz Allen Hamilton Holding Corporation, listed as NYSE:BAH, is a prominent consulting firm and government contractor based in McLean, Virginia. The company specializes in providing management and technology consulting services to the U.S. government and commercial clients. Booz Allen Hamilton competes with other consulting giants like Accenture and Deloitte in the industry.

On May 23, 2025, Booz Allen Hamilton reported earnings per share (EPS) of $1.61, surpassing the estimated $1.59. This marks a positive trend, as the company has exceeded consensus EPS estimates three times in the past four quarters. Despite this, the company's revenue of $2.97 billion fell short of the estimated $3.16 billion, missing the Zacks Consensus Estimate by 1.50%.

The company's fiscal 2026 outlook has raised concerns among investors. Booz Allen Hamilton projects adjusted EPS between $6.20 and $6.55, with revenue expected to range from $12 billion to $12.5 billion. These figures are below analysts' expectations of $6.92 EPS and $12.82 billion in revenue, leading to a decline in the company's stock during pre-market trading.

CEO Horacio Rozanski attributes the disappointing outlook to the Trump administration's cost-cutting measures, which have impacted contracts with civilian agencies. In response, Booz Allen Hamilton plans to restructure its civil business, implementing cost reductions and layoffs. CFO Matt Calderone announced a 7% workforce reduction in the first quarter, primarily affecting the civil business.

Despite these challenges, Booz Allen Hamilton anticipates growth in its defense and intelligence segments. The company's financial metrics, such as a P/E ratio of 16.4 and a price-to-sales ratio of 1.20, reflect the market's valuation of its earnings and revenue. Additionally, the company's debt-to-equity ratio of 2.97 highlights its financial leverage, while a current ratio of 1.57 indicates its ability to cover short-term liabilities.