BAH - Earnings call transcript Q2 2020 | Booz Allen Hamilton Holding Corporation

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Operator

Good morning. Thank you for standing by and welcome to Booz Allen Hamilton's Earnings Call Covering Second Quarter Results for Fiscal Year 2020. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for questions. I'd now like to turn the call over to Mr. Veasey. Nick

Veasey Nicholas

release morning website Booz Good We you joining X. presentation the for you've morning. earlier Thank also are We've second and now quarter for provided press read to Allen's an on announcement. we fiscal us issued had this our you. slides opportunity thank that and XXXX hope Slide earnings on

Rozanski, to our of Financial talk Vice and Vice Nick President Investor results Relations, are with Executive financial Veasey, Officer; Horacio our about Officer Executive me President business Chief Howell, and and I'm and and Lloyd Treasurer. Chief President,

undue our under for disclaimer forward-looking other no services and call. release in today's discussed SEC to XXXX this We obligation in update the cause be As you that statements among forward-looking subject are included and that the known unknown on some future and fiscal any second disclaimer earnings the discuss we our to and, differ Slide risks mind assume and quarter statements set items and discussed remind to place on Those on the keep things, from may which other our not we uncertainties will general Company's in include we to and forward-looking of shown considered on periods uncertainties, of will risks earnings release this actual therefore, or X, reliance that may in in the results. make conditions, filings. morning you government forecasted please funding that today statements availability information revise and forth materially include, results factors our caution may economic

explanation slides. measures metrics, in most will measures adjustments year GAAP provide XXXX some of quarter to non-GAAP our non-GAAP we and an the and investors. for During today's believe also We reconciliations other second our discuss include fiscal call, of other we useful information comparable which financial measures

pleasure turn to our my Horacio to now Rozanski. the over CEO, It is call

We are X. Slide now on

Horacio Rozanski

pleasure Thank good performance. another you, and quarter of Nick, morning the operational financial Today, excellent we of reporting have everyone. and

second Our our strength demonstrate the leading again, institutional Allen's Booz market. quarter and position numbers in once

of September our of both year I XXth objectives are with against thesis. and where period year this investment our are XX and marked midpoint at and X-ear this Lloyd multi-year extremely current for the ago. months fiscal our of pleased the the we set we plan point

performance the the operationally we expectations Today, and for of and discuss firm's remainder will the our summarize financially year.

thesis. in the As always, it investment our context put we all of will

at me strategic level. start Let the

over operating we is firm know, more you the years, more past As X have in innovative, capable, that technically and areas. our into mission-critical transformed more one

do adoption We the clients technology to are how time need a to so. from at get resources the and have they showing when value

has capture the driven XXXX the economy aim Our from said in is before, and fundamental shift Allen Vision of And have been our of the by that's rising hardware past period. Booz economy the to software demand This to pay-off I is future. as strategy. today the

powerful of created and, it a differentiation us created in has strength has equally Disciplined strategy position today's lean execution we of our future. the as market into for important,

strategic stack the capacity evolve environment. like our market; to the the investment to talent, demands the emerging driven and We dynamic tech fast-changing firm agility, the meet have and things in by demands global

firm's We our record growth need also while and of will consulting, believe at clients and performance. into anticipating the future mission, the of technology, proven intersection the consistent ability can what sustain operate of our next, to

all served the solved. problems is clients, and missions the stakeholders; people the the to This we our employees, core are value who announced we investors, at of from the for all by proposition have and way

goal also diluted XXXX. The of the of about year about position in earnings fiscal share strength $X in in goal. shows in performance investment per is to delivered track achieve remain to year thesis market our increasing $X.XX fiscal for adjusted XXXX core we the This the on foundation we from quarter our second

for at executing fiscal that recall conservative of set out in second uncertainty and plan budget to in government year And line. the has year federal place still new the are aggressive in was of more budget. our relatively because half gates there spring the a half. the a process, and the we plan about while come appropriations this this been You'll not and fiscal We first finish fast, last progress

fiscal gives share. the half our will both our we first guidance, diluted end that confidence original at But of the adjusted per year above for year revenue our in us earnings performance and own strong or

just the to specifically another total. achieved shy today with we XXX hiring, brings are a excellent revenue in We had which us results I second increase double-digit exceptional. XX,XXX our talent report We quarter. outstanding base, to for think, of Turning organic growth The quarter people profitability.

markets fiscal XXth, across the well for ended, Bookings September our set year of backlog. seasonally diversified record as another and and as were government strong we

manage and three of channel our single the business, towards best resources & As us agility strong. P&L. opportunities. Through allows year, growth is in especially quarters the Defense firm Civil, of representing fosters as fiscal first to you a we the the This know, roughly and half collaboration,

fueling highly and of to to for expectation. demand In revenue fact, is strong, transformation, is our it's constrained the need but success. market, somewhat talent. data areas also immersive cyber, Shifting The and and insertion systems of the technologies in digital hire is clear our as new continued growth source integration, intelligence need analytics, own ahead such by

of after center the clients X% our growth business we years for XX%. over the year we'll which probably are Still, opportunities this capturing business, of global time, continue medium In represents the managing missions. of our this three leaders exceptionally great flat well see market. right term, about in across potential growth business be this the In to and commercial, profitable at

services are helping locations They Our skillfully high hundreds transform teams, spread clients quality advance and solutions. organizations of and across delivering innovation. and worldwide, are

On guidance earnings cash, XXXX for our of first quarterly announce half, per our adjusted dividend. today, share, as operating the diluted excited their increases to an well as in fiscal revenue, strength year in performance the we're increase off-cycle in and

the to I what one option call call touch briefly Lloyd over turning final financials, Before we thesis, the of want of on cover investment to the aspect to piece our value.

focused know, you been Intelligence. firm As has in our Artificial developing premier on recent offerings in years

AI we investments services have today, the a intelligence, across of Because defense business lines. robust and made, civil, many have we

lab organizations other hurdles from the We are the helping and such proud as of to in to DoD field. Joint parts overcome AI Intelligence capabilities the Center be Artificial the moving

AI efficiency, maximize control. making, decision operationalize improve to eager ways in and are will that Warfighters speed and command

integrate demand We growth the services side AI of continued federal expect in demand, to into strong more their rising our agencies This missions. business. meet it, growth capacity work our and to and more is on as boosting

AI to business are our thesis. models have we based new to these goals new the our augment business our developing also our set ways and lines monetize This beyond model value, the property. approaches And enhance investment financial and in intellectual with exploring revenue labor performance potential option is because new

that optimistic growth. of not partnership a with On we're old. release our We our an year. expect week. platform exciting milestone - for This is about release at an significant clients Still, towards of XX NVIDIA in-mission production next the AI about significant is solutions this will potential our limited Conference early Booz holds number fuel front, access at months we this Allen's expectation AI for software next the strong an prototype, GTC product a future hit will announce and clients, providing least it Allen Monday. paying secure to to do of Booz is a step access the Because

results our you quarter. Lloyd, for the And over of with full that, to

Lloyd Howell

fiscal aggressive And We Horacio. second and exactly half, year for good take morning you an we've details the excited through into of to came planning for an delivered. that's Thanks, Allen. everyone. first quarter what Booz I'm excellent the

increase cash ability full-year gives of deliver Our revenue confidence narrow This increase a plan and that fantastic ADEPS, for for operating guidance. our full us decision to uncertainty against reflected another the and to we'll is strategy market guidance proven confidence to year year in growth. potential and execute

and line, Starting compared top and the are excluding high of year. consecutive Please grew hiring compared XX.X% an quarters to period. extra The go client phenomenal our year market Slide both Let's execution revenue by through believe billable increases the to retaining talent, workday last unique in expenses, quarter to demand, X. the success sustained turn our services. second We three numbers. position and supported revenue by quality and the to prior and were hiring at due primarily

be Allen for diversified at it's our and an and with of quality and partner technology a the our We intersection strategy to that made range to pleased clients. that Booz are consulting, very clear of breadth valuable is of has solutions demand mission, work we're the winning, increasingly broad the

Turning to all month in Slide a trailing excellent and award strong environment the X.XX figure our times, for XX is supported robust markets. quarter times and line activity with X.XX outcome historical X. by performance Book-to-bill was both proposal across at

$XX.X higher $X.X Funded X,X%. $XX.X record and our priced options the of billion. a X.X% period prior at and high as grew backlog Total new year for by the billion, increased September Unfunded backlog XXth increased $X.X firm. billion X.X% at was XX.X% than billion of end backlog to

said, by by X,XXX quarter, or the since the XXX of June. second end as Horacio X.X% year-over-year Headcount, end of as up of and, the was

on backlog hiring Our meet continue year. and our to success objectives of date second ensures the for we can to our in half that execute the

second Adjusted XX for Adjusted with to the same points period up XX% was Moving line. the EBITDA the compared was million, bottom quarter EBITDA year-over-year. $XXX for margin quarter XX.X%, last the basis up year.

business, Our focused and by management to contract margin, technically margin work. performance, efficient driven shift strong ongoing continues of be performance an towards higher our

and for long become into organic have translating revenue people adept as industry-leading growth our businesses profit, our term. We we at support even the

global lower mentioned, growth As due we and other do than flat spending, first pattern, typical the in our anticipate half to factors. second the a increases commercial roughly margin Horacio that the unallowable in in seasonal in is

margins believe low year XX% That said, with we range. we finish the EBITDA the will in

expansion. by quarter increases adjusted net income grew to respectively. and The income are margin and $XXX.X due XX.X% XX.X% $XXX.X Second and million net revenue to million growth primarily and

second This a share translated $X.XX. in per adjusted diluted quarter increase $X.XX to to earnings

one ago. million Our weighted declined compared shares average to diluted X.X outstanding year shares

cash were the first total the operating in of million last at $XXX operating million $XXX for generated year. with We where quarter, the cash. to on half par our bringing cash first roughly half to generation end Turning we

cash operating full Additionally, cash the to in guidance. the our with increase confidence strong due collection cash to second us we've we anticipate during gives conversion year half, the which success cycle, had process improvements

support an to Capital continue area. new facilities, outside $XX and million secure we expenditures and the technical and infrastructure, space to Metro invest new increasingly for as were includes retrofitted the Washington growth This in technology. continued workforce, technology and lines, business quarter

Please turn to Slide X.

long-term Our aims strong allocation the and capital that we patient, second both as and dividends our for approach, million for financial to through to quarter. shareholders. the deliver with serves foundation Consistent $XX shareholders returned near- performance value this operational a during efficient strategy

to remain in to $X.X deploying billion We fiscal thesis. with investment firmly committed our line XXXX from XXXX, our year targeted

our and capital remains that disciplined priorities We term. all our maximizing long ensure options to are deployment and near, we approach unchanged. mid, shareholders in our value of capital for the Our continually the evaluate

$X.XX. November Xnd authorization increase on off-cycle of per of a investment growth quarterly commitment of component the on to dividend a quarterly dividend quarterly December XXth. $X.XX our XX% increase as This dividend the thesis. to record payable reinforces of our of stockholders announced is morning, This off-cycle share Company The

our assessment do that usual expect January. As we this as year. annual dividend And each occurs know, normal you to assessment fiscal

first our guidance. and the my exceptional at our record growth of our decision backlog beginning to the mentioned headcount narrow combined I support half increase remarks, with As performance strong full-year

Please to Slide X. turn

X% the revenue For exceptional between growth percentage XX%, to first X than top-line X more and performance XXXX, guidance to points strong expect above now due bookings half. fiscal year we original be in the our and to

our revenue margin narrowing to given guidance date. our also and full-year raising performance strong We are ADEPS and

the to share $XXX a to on XX% full per range This average is per XX%. outstanding of share based fiscal for tax a new the revised shares and range $X.XX to $XXX million The $X range in is year. rate weighted a million

our cash. operating to a extremely and expect million. increase $XXX for now performance. between Finally, that with million operating first be we I'll guidance reiterate we in closing, have In $XX full-year million cash half $XXX are pleased our We

and remain exactly path. are We a strong on executing according to we plan

goals. remains Heading half optimistic continue the about our the into the and the is year, financial second team entire multi-year meeting of excited fiscal success have management to we about

the let's Nick, lines open questions. for

Nicholas Veasey

Daniel, please open the lines.

Operator

[Operator Instructions] Stifel. comes with Joseph from DeNardi question Our first

Your line is now open.

Joseph DeNardi

morning. hey. Yeah, Good

Horacio Rozanski

morning. Good

Joseph DeNardi

they than have Horacio, multi-year the were folks I months expecting generally targets you've business. halfway bullish kind and through your XX ago, into shown think were kind of guys now more an of to longer-term provided when ability you visibility

just a terms level less how that I'm if Thank mean, could of talk over bullish sustain of environment. this Maybe the you the talk visibility that's context delivering. that been investors I you've few can I focus think years the in a wondering main of next about all little now about looks growth in that bit. just you. you of budget

Horacio Rozanski

question. about very And, that the that position market the feel in this We have about Sure. feel Thanks good we're good for we in. in we market. the particular,

the it's the in and that, missions especially resources technology, have to our us, consistent means so. the do for not saying will through and their who the been inserting have the advance to budget; I've of the is this desire clients think about size overall about [ph] I

given way expect posture leader us line bottom quite expect to we have our we they do, that doing team going and to organic differentiation to drop picture revenue that -- business margins being continue that the continue the in And is in operating see the to we're through And that the forward to growth, then it. and carry our we been driving, is that the us to way future is that strong believe continue we into allow to and our good. confident we will

Joseph DeNardi

sure I'm than you of through, you. better been that And extent embedded lines, expecting? bookings outlook. to halfway for bookings talk in were Thanks those you've just an you was around assumption Can along was there that then about, Thank what the realized which three-year have questions. kind the

Horacio Rozanski

actually Our quite environment strong. booking is

to of fiscal you Lloyd have backlog this first record and half year. mentioned, the saw, coming as out we As of report

that I constraint, to being we can the available. we've don't is backlog feel we the right at as into we're to with continuing think, our clients of quickly skills, saying again, feel right the risk been as that's fulfill find demand very them we challenge boring, that to consistent in that the people deploy

to well this fiscal been that and And doing certainly that we've particularly year we continue. expect

of which guidance. current So, it's and, good why market we quite despite is can operate with scenarios have picture raised in of budget a we that again, this believe bit some confidence, a narrowed the we and

We declare up our increase ago X.X% projection. off-cycle, on our is dividend in for investment the our numbers just first headcount half, we the $X.XX months six increased the thesis back-end

all succeed are market these think I our to confidence of in capacity and market. this the signs in

Joseph DeNardi

you. Thank

Operator

you. Thank

Our with Jefferies. comes next Sheila from Kahyaoglu question

is line open. now Your

Sheila Kahyaoglu

you boring, time. results good never Hey, the are Thank Horacio. morning everyone. these And for

all you're So, good.

Horacio Rozanski

Well, these are Sheila. headlines, your

Sheila Kahyaoglu

timing think and increased, it pretty the and second about -- of Can still we my little big headcount terms just half? Here's do impressively, Is is about a -- but a talk there in that It's first of bit on growing between question pretty delta that that? In contracts the is you scope growth. growth. that How revenue ramps

Lloyd Howell

we both folks in if are and is as sourcing our growing deploying Historically, the getting there a headcount delay talent, conversion planned, the Sure. and those deployed what's of in backlog. our

percentage, one-to-one. So, rule see it growth in of higher is few terms a a headcount typically never our percentage as it's of been than historically, we what but a thumb, points

Sheila Kahyaoglu

maybe think processes AI how attainable? of mentioned year, term, clients a more, customers size, expect it the on longer bit little how just you adoption quantify the then Okay, paying do color next add Can it? And don't and on quickly are about market in do any expect that just adoption the little think a accelerating it, thanks. we Horacio, overall you you that but you you bit that just of

Horacio Rozanski

of So, both about let talked remarks, figure prepared on where key the But solutions, traditional business, are is AI as them. both but JAIC. option-value of one create you take success opportunity labor-based me a and that AI our the working I places our how at think to give seeing work with a them to the most as of about the both And In field. the future. some We to out huge we're business, color. many component clients type our importantly, for we

ago, at we talked HHS that is technologies use Intelligence point to in A who at big months that and win improve anything which effectiveness AI. the data federal has demand see military, a across government. a about we component, in mission of This to operational few intelligence, increase [indiscernible] in is of our our for this a clients on looking broad-based these most are

of to mission, access bring train beyond that parallel to of they clients looking in monetize our few different in In we're platform we're take actually does that for intellectual what we still a is seeing the ways limited ways. is We're we've with what capital in advance more these proposition that, and gives is the know our near-term upside the bear purely fact can a to that piece models that been access our it. this it. period, Monday improve business. and the different in of more labor-based, to the announce advantage clients to That's as in needs are And where missions to the to the that in labor-based is mission proposition both with to longer-term software and on detail a working it that test pre-release what this way has we'll secure, that tail

we'll on. isn't be one value And of inside and from about option portfolio, these we'll into what want come path full-production of things. side. That's which we'll our premature to fit certainly come a in revenues initiatives potential a then a talk it's begin And thing, hopefully, But number to are. time, looks see, that whole It's that. group now, like mode that you and to don't go the year for right from more we back about it's and now, what at of of them financials the the but do

Sheila Kahyaoglu

lot. Thanks you. a Thank

Horacio Rozanski

Sure.

Operator

Rumohr Cai Thank you. And from Cowen our von with Company. next comes question &

Your line is now open.

Cai von Rumohr

you thank Terrific, very much.

quarter contracts So, much have that in task ITOPS of take-away $X of your your roughly you give may away bookings protest you? protest are some taken have cleared. you us much VA you protesting from from benefited terms in how the do Could how color that order billion and wins, this been

Lloyd Howell

of said past, as environment. environment the protested terms I in is protest, overall, In heavily the Cai,

Now, us, protest and up amount that being side the of -- of the said, for minimal minimal in ourselves. other end got amount protest of we've other tied also the a coin, on

Cai von Rumohr

continue you $X of looks foreign me between then to you've $XXX for now And 'XX fiscal to billion Okay. spend to look deployment. million a on or like repurchase the got That M&A. capital and share end to close

and half buy go continued stock didn't You first in that stock prices your much to the up.

how setting the So, think two you're on options? priorities should about I those

Lloyd Howell

looking that, a returning great term, But and Yeah, Horacio long I M&A, remain we're in how with dividend options; mean, we our in look and through going to a that we're alignment share and the we line near, patient, mid to the recurring we're to and is, of FY value for maximize shareholders always increase special. bottom remain regular possibility as of fact continue what in our the are and mentioned, position. committed all for we at disciplined, the repurchases, $X.X an tuck-in the billion is 'XX off-cycle to $X.XX did

for disciplined our If feel patient as make the as working performance return on ultimately being which we strength we've number been to strong that you possible, going of is to $X.X of billion. sheet, and operating look at the years and our being a balance

Cai von Rumohr

much. very you Thank

Operator

you. Thank

Raviv with Our Citi. Jon next from question comes

is open. line Your now

Jon Raviv

Maybe a follow on those for moment. XX Hey, thanks, morning. higher. are ago The certain numbers over was months a set just $X.X along of said good Clearly, I'll billion you years. there three numbers based

why billion So, directly $X.X asking, higher? just

Lloyd Howell

And felt we years, to color three that capital was as we forward in our it When the to providing adjustment, have over adjustment. see be the straight-lined target, to more the past, never that We well X% the in thesis, an that really deployment good. top-line growth ADEPS projections. make X%. we put demonstrated also as investment emphasize We've as growth around need would of we'll the where make our

it which feel do alignment that we're So plan year. very be we but we ruling in or excited have, to not about it's could the with out that not, we're this important stay

Jon Raviv

strategic from that color, mean tuck-in? does the And you size say when that Lloyd. patient could What on and [ph] a is Appreciate what a or tuck-in I understand M&A, what perspective, size call then a you perspective, perhaps. a from there means that

Lloyd Howell

market really. implications us, the mean, Not to of what financial reacted available deal. what's always I the broader we making any sort have particular are to of

XXX our at every we're As earlier, over buy growth, don't I of disciplined. strength given mentioned patient and need we look We year, the organic revenue. opportunities and to

of so, the is And it a that is at levers pulled very one to-date lot. one much not just we've that our disposal,

Jon Raviv

Thanks very much.

Operator

you. Thank

from Our question comes next Goldman Parsons Gavin with Sachs.

Your is open. now line

Gavin Parsons

good morning. Hey,

Lloyd Howell

Good morning.

Gavin Parsons

and ask margin often a lower the just growth at in I growth wanted you Typically, faster to margin, with dilution. contracts new coming dynamics. results about

whether Thanks. you a customer talk maybe about structurally if you a Booz-specific can could anything also that has approach from from but standpoint. and changed, perspective So maybe

Horacio Rozanski

jumping a out start and I'm throughout. Lloyd is Sure. sure guess bit then I I'll

Lloyd Howell

Jumping.

Horacio Rozanski

work differentiated. more and technical us our Vision through is, The become dynamic for increasingly XXXX increasingly has more

at of ahead better. in own do that doing, work not worst we're center to do and XX of on-boarding at and investment have go affords through than the center those cases that so way, signed technology back we in better And I we and what us If thought was seen. our thesis That's the what months ago margins what you that's up we our a of clients' what significantly. we're think if different the that margins we inserting before. we've is missions we're why are what many actually missions, is expectations; That margins into up Frankly, would

and really industry we've differentiation quality, rest occupy comment where the can In clients we about of that don't quality in matters, that were I that and to the place the talked was industry where behaves. part, missions high-impact where this I gets looking this on rewarded. how and bifurcating high-quality of fact know past large the need

Because capabilities, in And us turn we retaining this invest allows It ahead. for that's people it virtuous to us think to invest market, of where continue we I then looking can that, we the enter to can affords the and new are. in in this and in circle. opportunity stay best

Howell Lloyd - A

that. we're So The I the year. year add of would just ahead XX.X in of to XX.X and QX, this half where we were for last first

it level, on points increasingly our terms a things. There bit of higher a working. of our our to really little have couple on cost-plus materials offset increasing, technically mission what been team you that and at just a And of focused has mentioned done clients' our and work. a work Certainly, think which we operate and percent fixed really have is I mission. margin the lower, dynamic and people Horacio time at to typically is And by at center look that higher been that. it's in when of impact, just and the a execution price margin, being our strong higher

Gavin Parsons

for Horacio, market? your talked how to about you to That's talk addressable the possible previously. the your platform you have been that mean, I great a as economy. color. shift approach expands soldier the Can And then, software example, wouldn't about

had that for you for areas Thanks. budget new up hardware? previously open reserved maybe that been does how So,

Horacio Rozanski

a It's question. great

in the on to this industry, changes. that at is to -- I world, pay-off warfighting, and that believe satellite, the into becoming source networks, creating car cyber is what allow And I have work that to I of to and across into So, why uniquely to [ph] We give; at all each And those some what And mean, multiple Software so but creates it's drone, essentially can leaning collective you, from on in components who And happening the and lines both XXXX. same right? of just fabrics at becomes analogy positioned example, or the we're defense, it the how of car talk period coming you seeing. under couple is water. uniquely in We're where, the platforms. from analyst; intelligence. creation; ground, from is create positioned the on the that open that's Vision as way It future. car look real soldier the an protection the drive that we wheels. of a I Again, a were know, disseminated. It not the to on thing I have for protecting space, If now we're The of bigger architectures security drive and we're would changes and value And place. create much deal. edge she -- the had types wires. think -- this gets the that have value I-powered for environment. might needs a a a that gets the software We're that agnostic exactly visor this zero But is code. AUSA whether protection dramatically he solutions. data learned the is already deny Analytics other added doing across of of the information a is we're same winning. in I intelligence, This

all about now -- talking across about value area, and telling the Treasury of diligence; of things. you around defense health and I fraud the data law the those data the importance of just spend I'm government Treasury the about in detection XX another health any enterprise, the minutes And same and stories could enforcement,

here opportunity is this as This a market for. market now, capture much to been intend is we I can. preparing So, that, we've and think, we as

Gavin Parsons

you. Thank

Operator

Thank you.

Our from with Carter Copeland next Melius question Research. comes

now is line open. Your

Carter Copeland

good Hey, gents. morning,

Lloyd Howell

Carter. morning, Good

Carter Copeland

but on treat a tease Halloween. after was another So, delivered a holiday, I going call then you conference to you for

tell I'll what you So, doing. keep you're doing just

Horacio Rozanski

Well, because yesterday more been it plans; have tired. would have been worse lot us [ph] a match all of would

So...

Carter Copeland

Lloyd. Super out Yeah, you it worked did that way, and but that the guess on yeah. hard Bowl I was

doing. you're what doing keep just So,

Lloyd Howell

Thank you.

Carter Copeland

in the things the treasury those if might couple a just if don't strong hinted if attributable some us I have show been But health -- agencies at growth couple you law share has to of colors particular year-to-date and wondered that response you to the One, you and Horacio, Look, on and civil last very wondered the a I but and the of strength. mean, can I may in know I seen for was obviously, where color, question, me. enforcement -- enterprise that you terms

side you just And Is then influences as did of commercial lumpiness, any drive there? standard talked kind are there just contracts sizable you're kind growth the particular flat the on results about seeing of that that and there the Thanks. geographic a second or there. or question,

Horacio Rozanski

Sure.

first, what's Let last year. I'll we do business, a wound contracts had because the In down global few commercial and that driving numbers otherwise that's forget. me our one the this

I, remember, a reported calls same If growth be consistent, when we of couple ago back commercial, XX% to in the you annual answered way.

On one called the other which contract couple of is lumpiness will business way you going that the size of short-term other; of the it, well, portfolio. side, it that a maturity, or and differentiated, a in as We drivers business, to and remain cyber long-term performance, accretive continue we're strong. very that but overall will believe to of work our be our confident the we're especially, drive that

it growth is And of whether rate protection is to way helping our has X*** the a it's mission. implement to inside Automation; question intersection the AI the and really continues Investor do to we of for them scale, very side, growing It's business, on been you'll Health has Cai anchor that so. about type as civil about for detail well do whether agile size and the technology development has of has some ITOPS. it player to which business business that quite been business talked and of win. that in ability do the the of That's health a again it; just whether at and remember, not done and Process beginning well asked and fraud now ***Part time. the major Day, business the moved detection different which in The On that it some our is is the cyber agency,

Horacio Rozanski

all of are the Those drivers growth.

If really FED is banner year, to strongly; is it's own performance, the which strong enforcement of again, you in but law underlying and our agencies, and also which associated drivers the very we what exciting excited again, growing why a well, transportation health that is our it's business, you have business double-digit look and its the this call year; which Treasury is having right, is doing optimistic. very get it at and me

Carter Copeland

for color. thanks the Great,

Horacio Rozanski

Sure.

Operator

you. Thank

Edward next Our Caso Wells comes with from Fargo. question

open. is line Your now

Edward Caso

what Tech Hi, And the could is there is shifting if and year? a a dollars in curious the forecast Solutions, around I'm congrats good towards for in iRead? here. and talk CapEx deployed morning, as budget, the little change trends, also, your more philosophy market about you this

Horacio Rozanski

I'll We the of the second on Lloyd positioned half. we do take front take continue what first half is better to -- do the question; the to

get Valley bring lean that and expertise to innovation the we beyond, half, continue group, which we players do Silicon these first do is began and formulated the to capturing build to in the clients. positions we external technology, what XXXX, to where the get then new and when On that we forward partnerships technologies, oftentimes into to knowledge actually with in to strategic in understand

where we're So, we to our beyond that high communications at open to the to demand tier us the in right things upper like that -- XG, of continue. the topics if more an about is we a we'll talk intend and about later areas and other number depth. area allows XXXX -- scenario original talked time anything, of in ccess

element clients, plan. simply the through than on being IRI deploying that's core seniors a and or these technologies to our able whether our exempt through more into play that's game understanding of and But

Lloyd Howell

with will to CapEx of more expenditures. objectives more are manner. facilities really we to our collaborative Financial around million level the be support been a likely we to as that on then a at systems, Human tactical, the a many talent that improving growth it, aimed around expenditures our on And and CapEx really infrastructurally innovative side we've XXX want to be we've be to our become that will think with at IT in been consistent that context of and work experiencing allows the capital and That's allows us bring source board consistent is .We're our us continuing the upgrade Capital Just

Edward Caso

resolution second would it CR other does half? they or talking roll point, be XX it fill on question question which they're or a CR. done the Thank you. your already you with is, that on And miraculously about into is if of guess outlook then November get flip at extending bullish continuing November year more around I beyond the we your XX, if My some change that next

Horacio Rozanski

to fiscal in very year back of to raise did the at we out our decision for We're aggressively. come very some prudent I'll We the was was the time, the at this you'll of plan recall in there beginning it we we and gates half. strong right to forecasted the very that wanted start. that year, same guidance excited uncertainty this said

had we more a So approach. conservative

as So beginning said, (inaudible) there o of the this raise confidence we've already we our the account believe the then indicated taken at into the year. with and that year in demonstrates

question the to excited mid of going that we We're end that's when your narrowing point at we're the logical year know a that of indicative where we year. point, about So this that. that we're just our are very believe to and ranges broader in you of is get address raising we not

Operator

Thank you.

from comes with Credit Robert Suisse. question next Our Spingarn

Your line is now open.

Robert Spingarn

morning. Good

what can learning, be a a unpacked you're for into of maybe Lloyd and little you're Horacio you to quarter talk terms going conference could bit wanted to computer and could talking bit at referring that that extent margins. tie AI to seems about specific have term into be could question a I dig I just vision. It little guess ask a a that. I like machine you within the the announcing we then you what that more if to then NVDIA are And bit in about So be wanted excellent actually to I

Horacio Rozanski

order may to way aspects chances you deploy if advantage making yet. not artificial to haven't building workflow not have if these that their of really a in are able focused -- work of The said the inside in emission intelligence,operational inside may workflow. than algorithms are be intelligence on we adoption all infrastructure to go Sure lower in take and that there they with of a fully be the analysts to new way so that has that outside tool their tested often be much mission of correct starts perfect happen that can they

have in people how you access communications, they deployed so out where be at working environment, put infrastructure those, how to that (inaudible) can If have the create do don't you you do the technology edge.

the actual second do do them of in aspect place, with feel platforms piece mission final algorithms, sets. be algorithms is operators, put the but the them, how the one And That's themselves technology, needs aspect trained is of both improve train, the working it, can creation actually actually be the it these to how you and you so dynamic I mean in the so place this of that the of learn that we're and of edge through our on that's entire do ask you breadth clients in in to is a it's impact leading more Monday to chain to And tune working I'll the of going have on announcement are do the and at terms work fully How just deployed. with number on where that be Monday, you that. the data them. more the

Robert Spingarn

Today, that's lot tied Lloyd, margin to guess we about also market. about variable software is just margin economy. a efficiencies business also not moment Or expansion, just talked a the coming the a about talked then and just focus dropping cost is think I with and really tight the point through? the that here there mix. we Are for what about momentum the we what I Okay ago. talked from labor

a driven really expansion? margin is it simply So mix

Lloyd Howell

on mean which as right, have year. to we mean we also we're we last strongly experiencing as I been experience began focused operating what No, I it's now, can, fiscal you're

our change kicking better better and in. are all As of efforts operate to

do And has business talked what so, the the is right now about. strongly. business part of operating yes, for we very there mix and Horacio is sure, But as our

Robert Spingarn

Okay, thank you.

Operator

you. Thank

with SunTrust. next from Tobey Our question comes Sommer

now Your open. is line

Tobey Sommer

to that. on Thank make you would we business been sense in that you. Thank on comments appreciate and give extent the I Could your have color us some you. we commercial your to AI,

Horacio Rozanski

global know, of Our I it's have commercial business about total you revenue. XX%

know-how it and of know, deploying help focused that cyber sector The in Africa and one significant Middle taking face. the of issues is it's you has importantly driven they who US, strength to As and components I is by longer-term and increase environment, driven the the the are that East, the which North threat. here has near core our adversaries that because more on seen business to demand especially core region. in the one the In that rising two our more business sophisticated. and Unfortunately, and address say private clients continue that expertise more by it's

believe at our the of helping tier and So equally increasingly I that be that that stack. need the Booz clients Allen, top people need it's to sophisticated

intersects with the to that's think so is evolving all work for looking else, everything differentiation be I we're and it. building source that And where that going We're of continued XG AI business cyber places for like the us? the continuously technologies like like

Tobey Sommer

what Is and also in growth. the performance was senior difference quarter maybe in sort there hires? touch lateral of Thanks. your on out like anything Could junior then meaningful more of you of or growth, headcount staff headcount expand the school pace in versus

Horacio Rozanski

potential us then the the gives first narrowing any we in breathing same see aims try very by the the obviously and pleased have you far while has putting our team our aggressively with with we hiring the the work which so This executed half. their is half half for commitments year. which the perfection, at room environment through that half the -- to ahead first to And Again, entirety across the a uncertainty we first federal evolve, around of early business playbook, So, very get budget then just that lots we the people raising. of by shared of earlier in the performance and operate retention half, pleased the in the in as first and meeting about and year the second the hiring not time of with to

Lloyd Howell

hiring more Allen, and more has four the at probably of level. levels the have junior levels there we've and folks sourcing see, changes of by we more programs, And improve generations our a really underway. of that senior we at at the driven recruitment yield the effort but add just internship candidates. requirements would that we I Summer tremendous certainly Booz have We at well clients. an have senior and really is active with also always the needs made

the understanding various decision relationships markets of and their the makers Just have. given they the in

Operator

you. Thank

Barclays. Akers Matt next with comes question from Our

now line Your open. is

Matt Akers

Hey, good morning guys. Thanks for the question.

Horacio Rozanski

Good morning.

Matt Akers

touch wanted cloud I to on briefly.

cloud? that open on jet So I you build to one, guys am the of mean, that could kind I forward, the for number on stuff the then of more top opportunities And kind of moving up when to flip Amazons with side, like, the more competing are like could or personnel, this for you are your seeing hiring the they example? compete Microsoft for cleared use the any indications directly with business? world and of

Horacio Rozanski

of DoD. to as we what the trends providers and ahead are do. major allows that We to we all which it. to effective. at successful federal is , accelerate, work cloud these me be least of the in medium way for and believe the that being major cloud across holistically, catching up question one of some in occupy. and are vehicles demand term, cloud a versa. What with and And Let chain opposed vice in we that that the into those of it that do mission not cannot we that because is the the is do I differentiated to answer We adoption they think they is closely ways, deployed in contract we unique government, sort is value and positions will expect

again on a of AI about, we spend about what lot call. talking lot of talked about ability, bullish this time the we're we So a

cloud to need those deploy infrastructure You robust a modern capabilities. of kinds

Booz the I why on proofpoint think time. strong it's So and we see in across government Allen benefit another right at feel the the we're how in market the we right place adoption the cloud

Matt Akers

kind future? the conservative, thanks. guess low to that kind guidance, I in to year feels back get long-term of already the the and in threes you're we update XX% I the feel going [ph] guys that growth how you it, an mean Got this about just could of And near EDAPS then do

Horacio Rozanski

halfway very we I which another strong on our performance is lined Yeah, and But we through track makes year. adjusted as for our straight mean narrowed we're sense to planned, raised this exactly performance. have our never we're we've very tracking and it year, about had guidance date as excited we have and

closer metrics this an that we there we feel to As update get adjusted. other that the if are end to of any will year assess need be

Matt Akers

Okay, thanks guys.

Operator

Thank you.

question from Meakim next Our with comes Sean JPMorgan. Christopher

now line Your open. is

Sean Christopher Meakim

much I only on and first of the year wanted fixed two that good dictates up that very digits contract thanks what basis. types to the in and definitely year-on-year price type ask the and half I little morning not appreciate mid-single Okay, a bit a it's kind contract was of but profitability about kind flattish

mix shift for as contract kind the So accounts of growth in as what accelerated? has this type

Horacio Rozanski

the and turn really It's like in is Booz growing fixed market in in markets. fantastically the price, commercial responding as preference their our well to they support Allen. in defense contract we by The markets site to it's we've fundamentally appropriately our toward contract that market, as cost-plus by it the to engage would they driven as as typically site typically the obviously been is and that we that billion increase what clients relates been our driven see

approach a price very have We to the contracts . federal conservative fixed

think we're needs. anything there than responding read into based I is other it so our really to to don't upon clients And their

Sean Christopher Meakim

term of cash sort it's of And think prices for then kind you a driving below targets deployment, as year, increase set we of next another dividend think it because kind if of the at, longer yield is kind the as your your stock as you a as early still it. about you next the strategy. saw to of increase right look capital could moving to of think of increase kind the the return in still yields to But high-class be problem which that's the and if you do saw is thanks. today, Okay, right dividend have, target metric X%, follow-up,

Horacio Rozanski

investment was really when our we thesis mean the originally put time. I Yeah, out X% over

a is point have problem. somewhat we that our really to can think returns patient the we is the capital pulling and feel confidence that disciplined a way we're that we deploying earlier speaks provide your our our So this to a We are prudent call. the levers in really, mentioned that high-class shareholders. one of But that we business the and to in I

Sean Christopher Meakim

much. you thank Okay, very

Operator

Thank you.

[ph] next question William with comes DePalma Our from Blair. Louis

open. now is line Your

Unidentified Analyst

leaving commercial world. of right growth are around Good the out wireless is networks is for up XG Cyber the those protection in peak a wireless since security, government now to the the networks and driver carriers for currently morning Horacio, that a Lloyd or steam new at days build US and Is you the big those themselves? networks and Nick.

Horacio Rozanski

our to serve our both area or I is that this known and single dealing of intellectual To tested we're to and we're to wouldn't property at of thing somewhere the these all overall defensive these are clients clients a But that rather becoming all and the and skills clients in are is issues part domain. theft XG put second protecting weapons our and is these us and kind our based these opportunities said, platforms face our certainly for of point to off and a these that and drive focused of platforms the that speak where cyber with around run securing I they are often of me, single clients is at to overall that a on, are it technology in focus, this part again it but our rapidly opportunities trend to to as space with essential least second terms accelerating where not platforms value broadly dealing hone broadly changing Asians opportunities mix. continue domain of picture. as

Unidentified Analyst

Okay.

that of So other disproportionate it's platforms types you're not the above, and protecting? in

Horacio Rozanski

Not at the moment.

Unidentified Analyst

contracts coming Got contracts deeper work price increase winning? you're versus your in inflation that of from XX% digging final one. how scope new I'm that existing as growth existing you. roughly much is And your your line top like one from into growth

Lloyd Howell

up with specifically, proposals pricing at the the to for getting as but in challenge focus XX% make increases that QX work and that see wage [indiscernible] we be to Probably added coupled year more our typically how that a with and account, is a XX% high beginning rate, it when recompete, so of for rate we and new win submission. from we our taking time for

about my am So and that’s I at of the level, able very growth our excited level win this rate performance to been of generate. topline

Unidentified Analyst

price you’re upon inflation Lloyd, renewing a there general Okay, contracts, that and like renwal/ when is

Lloyd Howell

know, the we’re as that You to pricing government based obviously account circumstances, putting varies our receptive has and that. been take into we submissions upon is the

Unidentified Analyst

Sounds Thanks. good.

Lloyd Howell

Welcome.

Operator

Ladies Horacio gentlemen, that turn now today’s concludes you. remarks. Thank closing and to back it I’ll for Q&A.

Horacio Rozanski

at we are the This that event, a anniversary Allen to proud month robust and is Thank of. this Booz Q&A this a thanks been note, attention like something you. to I’d celebrated different gears close everyone. shift Globe. to on we XXth Feel And very very lot session. Because special morning at a call a of earlier

the that XXXXs towards in recourse business the group internal country past forget, under But late did. stride to allies. Its what has is easy Allen Our decade, in colloquies it under group allies. the made how to provide the quality that establish partners an in given or our Booz domestic exactly LGVTQ affinity children for company’s significant to for benefits employees was and for rate

our our which campaign the then support on rights index we’ve record has quality build so to human scored XXXX corporate quality to And firm the why consistory is hundred on since

who them a of authentic our of having on people, for that believe our new potential. to and to empower deal. sales recruiting, It our we people. the reach of every That’s passion. Allen We found to take been of firmly come are and most matters. courageous success And and as those We sales will firm matters are the a years a globe was to the work institution ago full person days. our hen their those demonstrations of It record and to its down We since matter and where purpose colleagues true also focus best to where earliest Booz their to absolutely remain. commitment Our to who their care purpose focus great group powerful comes our this values. its those here one XXX

have diversity, without being want who didn’t let on day. with our of critical publicly our a are past So and thanks on and I call And members continued to dimensions acknowledging this that that us central to anniversary Globe again, and our for great all note, success. the to we

Operator

and Thank for today’s Ladies conference. this you participating. gentlemen, concludes

You may now disconnect.+

Booz Allen Hamilton Holding (BAH) 1 Nov 192020 Q2 Earnings call transcript