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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Adjusted EBITDA $1,315,000,000 (12% year-over-year growth) - Exceeded the top end of the target range set at Investor Day in October 2021, representing nearly all organic growth.
Revenue Growth 12% year-over-year growth for the full fiscal year, with Q4 revenue growing 7% year-over-year to $3,000,000,000 - Driven by strong performance in defense and intel businesses.
Adjusted EBITDA Margin 11% - Maintained margin despite challenges in the civil business.
Free Cash Flow $911,000,000 - Robust cash flow generation supporting capital deployment.
Net Income $193,000,000 (51% year-over-year increase) - Driven by increased profitability and a lower share count.
Adjusted Diluted Earnings Per Share (ADEPS) $1.61 (21% year-over-year increase) - Driven by overall profitability and a reduction in share count.
Cash on Hand $885,000,000 - Strong liquidity position.
Net Debt $3,100,000,000 with a net leverage ratio of 2.4 times adjusted EBITDA - Indicates a manageable debt level.
Capital Deployment $1,200,000,000 - Included $310,000,000 in share repurchases and $70,000,000 in dividends.
Employee Count Closed the fiscal year with nearly 36,000 employees, with a 4.2% year-over-year growth in customer-facing staff.
Net Bookings $2,100,000,000 for the quarter, resulting in a quarterly book-to-bill of 0.71 times - In line with historical averages.
Backlog $37,000,000,000 (15% year-over-year increase) - Indicates strong future revenue potential.
Qualified Pipeline $53,400,000,000 - Higher than the pipeline for fiscal year twenty twenty four.
AI Business Growth: Booz Allen's AI business grew over 30% year over year to approximately $800 million, with agencies investing more in enterprise-scale implementation.
AI and NVIDIA Partnership: Booz Allen announced a partnership with NVIDIA to combine expertise in AI to accelerate the delivery of edge applications.
Cloud Migration Initiatives: Booz Allen is discussing cloud migration and consolidation with multiple agencies to transition thousands of data centers to a cloud-based architecture.
Civil Business Decline: Booz Allen anticipates a low double-digit decline in its Civil business for FY 2026 due to reduced spending and contract reviews.
Defense and National Security Growth: The defense and national security portfolio is expected to continue growing as Booz Allen accelerates the injection of AI and commercial technology into missions.
Record Backlog: Booz Allen ended the year with a record backlog of $37 billion, up 15% year over year.
Cost and Headcount Reductions: Booz Allen is making targeted cost and headcount reductions in its Civil business to match anticipated demand.
Operational Efficiency: The company is focusing on creating efficiencies to invest more in growth and realize greater shareholder value.
Restructuring Civil Business: Booz Allen is restructuring its Civil business to return to growth rapidly after an adjustment period.
Outcome-Based Procurement: Booz Allen is advocating for outcome-based procurement to enhance agility and flexibility in contract delivery.
Government Spending and Procurement Dynamics: The federal government is rethinking agency missions, leading to reorganizations, personnel reductions, and contract reviews, particularly in civilian agencies. This has resulted in a decrease in the pace of awards and a slowdown in procurement.
Civil Business Decline: Booz Allen anticipates a decline in its civil business due to significant reductions in run rates on large technology contracts and the ending of a major contract at the VA, leading to a projected low double-digit revenue decline in FY 2026.
Employee Redeployment Challenges: The slowdown in procurement has made it challenging to redeploy employees, particularly those affected by the end of contracts, resulting in a projected 7% reduction in staff concentrated in the civil business.
Market Uncertainty: There is less visibility into business performance due to the dynamic environment, with anticipated variability in converting bookings to revenue compared to previous years.
Cost and Headcount Reductions: Booz Allen is implementing targeted cost and headcount reductions to align with anticipated demand, which includes delayering management and adjusting infrastructure.
Competitive Pressures: The company faces competitive pressures as the government seeks to consolidate contracts and drive efficiencies, which may lead to further industry consolidation.
Regulatory Changes: The revision of procurement regulations, such as the Federal Acquisitions Regulation (FAR), is expected to impact contract structures, moving towards fixed price and outcome-based contracts.
Economic Factors: The overall economic environment is volatile, with government spending reductions impacting Booz Allen's civil business, while defense and intelligence sectors are expected to grow.
Adjusted EBITDA: Booz Allen delivered an adjusted EBITDA of $1,315,000,000 for FY 2025, exceeding the top end of their target range and representing 12% compounded growth.
AI Business Growth: The AI business grew over 30% year over year to approximately $800,000,000, with significant demand expected to continue.
Vault Strategy: Booz Allen's Vault strategy focuses on velocity, leadership, and technology, aligning with government changes and emphasizing AI and advanced technology.
Restructuring Civil Business: Booz Allen is restructuring its civil business to match anticipated demand, including targeted cost and headcount reductions.
Partnerships with GSA: Booz Allen is collaborating with the GSA to transform government procurement, focusing on efficiency and outcome-based contracts.
FY 2026 Revenue Guidance: Booz Allen expects revenue between $12,000,000,000 and $12,500,000,000 for FY 2026.
FY 2026 Adjusted EBITDA Guidance: Adjusted EBITDA is expected to be in the range of $1,315,000,000 to $1,370,000,000, maintaining an adjusted EBITDA margin of about 11%.
Adjusted Diluted EPS Guidance: Expected adjusted diluted earnings per share (ADEPS) is between $6.20 and $6.55.
Free Cash Flow Guidance: Free cash flow is anticipated to be between $700,000,000 and $800,000,000 for FY 2026.
Civil Business Decline: The civil business is expected to decline in the low double digits for FY 2026, with a rebound anticipated in the second half.
Quarterly Dividend: The board of directors approved a quarterly dividend of 55¢ per share, payable on June 27 to stockholders of record as of June 11.
Share Repurchase: Booz Allen repurchased about 4.3% of its shares outstanding since the beginning of the fiscal year, deploying a total of $1,200,000,000 in capital to generate shareholder value, which included $310,000,000 in share repurchases during the fourth quarter.
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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