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01/11 03:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows mixed signals: strong AI business growth and positive strategic partnerships, but concerns over civil business revenue decline and uncertain funding environment. Management's optimistic guidance and cash flow benefits are tempered by unclear responses on key issues and a lack of specific guidance, leading to a neutral sentiment.
Gross Revenue $2.9 billion, down roughly 1% year-over-year. The decline was attributed to a decrease in the Civil business revenue, which was down 13% year-over-year.
Revenue Excluding Billable Expenses Grew 2% year-over-year. This growth was driven by strong performance in the Defense and Intel businesses, with Defense revenue up 7% and Intel revenue up 6% compared to the prior year period.
Adjusted EBITDA $311 million, up 3% from the prior year period. The increase was due to efficient business operations and investments in advanced technologies, tools, and talent.
Adjusted EBITDA Margin 10.6%, up 30 basis points year-over-year. This reflects efficient management and strategic investments.
Net Income $271 million, up 64% year-over-year. The significant increase was primarily due to a favorable agreement with the IRS related to strategic tax planning initiatives from prior years, resulting in a one-time income tax benefit of $106 million.
Adjusted Net Income $184 million, up 2% year-over-year. This excludes the one-time income tax benefit and the impact of one-time headcount reduction costs.
Diluted Earnings Per Share (EPS) $2.16 per share, up 70% year-over-year. The increase was driven by overall profitability, a reduction in share count, and an unrealized gain from a venture investment, partially offset by higher net interest expense.
Adjusted Diluted EPS $1.48 per share, up 7% year-over-year. This reflects profitability and strategic investments.
Total Backlog $38 billion, up 11% year-over-year. This growth was driven by strong bookings, including $4.2 billion in awards during the quarter.
Free Cash Flow $96 million for the quarter. This was the result of $119 million in cash from operations less $23 million in CapEx.
Thunderdome Zero Trust solution: Proven solution for DoD, expanding customer base and transitioning to outcome-based opportunities. Delivered Zero Trust standards over 2 years ahead of schedule.
Tactical Assault Kit: Enhanced with Sit(x) and GvStreamer tools for real-time communication and live streaming. Successfully deployed in various operations including hurricane relief and the Super Bowl.
Tactical Operations Center Light Battle Management System (TOC-L): Awarded $315 million contract with the U.S. Air Force to deploy TOC-L to 70 global locations, enhancing decision superiority.
Defense Technology Group: Consolidated activities into one team to focus on growth in defense missions, rapidly injecting advanced technologies.
Civil Business Restructuring: Restructured to align with demand, optimized talent, and focused on modernization opportunities like the $51 million CBP task order for cloud migration.
AI and Automation: Utilized AI-assisted tools for faster software development and operational efficiency.
Headcount Adjustments: Reduced customer-facing staff by 5% year-over-year to align with demand.
Booz Allen Ventures: Increased commitment by $200 million to invest in 20-25 new companies over the next 5 years, focusing on advanced technology.
Partnerships in Tech Ecosystem: Strengthened partnerships with hyperscalers and startups to co-create next-generation technology.
Presidential Transition Disruption: The ongoing presidential transition has created near-term disruption, with government agencies realigning priorities and restructuring operations. This has led to slow funding movement through the procurement environment, creating uncertainty for the company.
Civil Business Challenges: The Civil business segment experienced a 13% year-over-year revenue decline, necessitating restructuring actions, including talent rightsizing and cost optimization. These measures indicate challenges in adapting to the current demand environment.
Dynamic Funding Environment: Variability in converting bookings to revenue has increased, reflecting a dynamic funding environment. This could impact the company's ability to achieve consistent revenue growth.
Headcount Reductions: The company reduced its customer-facing staff by 5% year-over-year and 7% sequentially, which may affect its ability to meet demand and deliver services effectively in the short term.
Dependence on Government Funding: The company's performance is heavily reliant on government funding, which is subject to delays and uncertainties, particularly during periods of administrative transition.
Strategic Execution Risks: Efforts to accelerate transformation and implement the VoLT strategy involve significant investments and operational changes, which carry execution risks.
Revenue and Profit Growth: Revenue and profit growth are expected to be comparatively lower in the first half of the fiscal year, particularly in the second quarter, due to a decrease in the provision for claim costs in the second quarter last year. Full-year performance will depend on the timing and extent of a return to a more normalized funding environment.
Free Cash Flow: The company has updated its full-year guidance for free cash flow to be between $900 million and $1 billion, reflecting the anticipated federal tax impact from the passage of The One Big Beautiful Bill.
Civil Business Growth: The company has restructured and reset its Civil business to align with the existing demand environment and is focused on returning to growth by capturing opportunities in priority missions, such as modernization efforts.
Defense Technology Group: The company is directing resources to its Defense Technology Group, which is expected to grow by rapidly injecting advanced technologies into defense missions. Examples include the deployment of the Modular Detachment Kit (MDK), Tactical Assault Kit enhancements, and the Tactical Operations Center Light Battle Management System (TOC-L).
Technology Investments: Booz Allen is accelerating investments in advanced technologies, including AI, cyber, and quantum, to drive cost efficiency and mission effectiveness. The company has increased its commitment to Booz Allen Ventures by $200 million to support investments in next-generation technology.
Outcome-Based Opportunities: The company is reimagining its delivery model to prepare for a shift to outcome-based opportunities, which are expected to enable greater innovation and cost savings for the government.
Hiring Plans: The company aims to increase hiring through the balance of the fiscal year to support the ramp-up of significant recent wins and areas where demand is accelerating.
Quarterly Dividend: The Board of Directors approved a quarterly dividend of $0.55 per share, payable on August 29 to stockholders of record as of August 14.
Share Repurchase: During the quarter, the company repurchased just over 1% of its outstanding shares, amounting to $154 million at an average price of $109.42 per share.
The earnings call presented mixed signals: strong technology investments and optimism in defense and cyber sectors contrast with flat civil business and competitive pricing pressures. While full-year guidance is positive, the lack of immediate growth and cautious ramp-up in new contracts tempers enthusiasm. The Q&A highlighted uncertainties and management's non-committal stance on short-term performance, suggesting a balanced sentiment. This leads to a neutral prediction for the stock price movement, as positive long-term strategies are countered by short-term challenges and market uncertainties.
The earnings call shows mixed signals: strong AI business growth and positive strategic partnerships, but concerns over civil business revenue decline and uncertain funding environment. Management's optimistic guidance and cash flow benefits are tempered by unclear responses on key issues and a lack of specific guidance, leading to a neutral sentiment.
Booz Allen Hamilton Holding Corporation exceeded EBITDA targets and provided optimistic guidance for FY 2026, despite acknowledging risks. The company beat EPS expectations and initiated a $200 million share repurchase program, both positive indicators. The Q&A revealed confidence in defense growth and AI programs, though uncertainties remain in civil business stability. Overall, strong financial performance and shareholder returns suggest a positive stock price movement.
The earnings call reveals strong financial performance, with a 12% revenue growth and a 51% increase in net income. Share repurchases and dividend payments indicate a focus on shareholder returns. The Q&A section highlights growth opportunities in defense and intel sectors, despite challenges in the civil business. Management's strategic positioning and robust backlog support a positive outlook. Although some responses were vague, the overall sentiment is optimistic, with a solid financial foundation and growth potential in key areas.
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