BAH - Earnings call transcript Q3 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 Third Quarter Results for Fiscal Year 2020. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for question.

I'd now like to turn the call over to Mr. Veasey. Nick

Nick Veasey

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

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

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

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

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

are five. on now slide We

Horacio Rozanski

to Thank latest Lloyd results and everyone. today. pleased our share good very are you, quarterly Nick, morning, and I

saw in momentum Booz Allen's you As release, our earnings continues.

business investment strong and Our our the fiscal are we thesis. in financial the continue deliver laid finish performance out to leaders to year looking

of XXXX. a differentiated capital This market that growth our can driven increase strong margin fiscal increase year an profit adjusted per that strategy. generation share value-maximizing diluted supports cash At expectation would to by a our from XXXX the revenue firm industry-leading is produces in achieve thesis position a fiscal the in that be center over three-year period, XX% year earnings growth, and deployment

gratifying is of plans the and pleased It operating announce to of both their the talented operational and another for dividend. team. cash stewardship the see and our increase in guidance ADEPS to another increase that we in revenue expectations to year, thanks for our quarterly our to Because performance our outlook efforts, fiscal today coming improved are are fruition, financial and an

our support the and year to outset investment at call transformation. reflect will the is of shaping three-year quarter discuss full year context in third to full of of details fiscal we Today, up how our XXXX goals XXXX, the the on this firm's want given of also is earnings year moment take thesis I that a the to first our and calendar the

end was and against is strategy then suggest Vision evolution eight it but would XXXX, in When it This XXXX. about that we setting bold a done. executing for the ago, called Allen's strategy never what relentlessly launched we have that our exactly Booz growth we future to we vision years and meant

diversified In ecosystem ourselves reentry parallel, the and base, more a our commercial the and portfolio become global more innovation successful competition our tech fierce to our into We in center for have technically moved grown including of than talent. own of talent established closer our market. the mission, expanded business, we holding amid clients' have capable,

our strengthened has our which and employee experience values, and purpose our reinvigorated execution. also We enriched

the was Our easy and if in to of clients, the industry close for because we first of be one firm was committed took market a shrinking to remain lean not the And It Vision we since we we committed to our XXXX competitors strengths during return but contracting. we time as and have a budgets and our federal to industry, then, time an knew would growth. invested, core advantage outpaced firm. stayed to our greatest strategy, when that forward were

right today always and what creates the capabilities ensure investing future. that in and it. in looking next that we're around business to bring and opportunity so This our all the for corner talent, in we clients stakeholders We're the need they consistently

to we're confidence apply Today, evolution success premier is It the the technology as the insertion multiyear demonstrate federal XXXX latest changing. we has continued history. commit important the us government. the is market to constantly we our serving XXX-year are has working. created the the our solely given in us, clearly firm's conditions environment in, financial goals and This positioned that around our company and for technologies The that Vision is understand operate strategy to

the Our change. in the so foot ahead to the present do stay and job one by is keeping future. We of in one foot

need edge. we that what XXXX, or and momentum. We're created are more to look do asking, taking may we different everything maintain reached our to at a Having growth our

of true take that and strong, As no drives differently will retain all challenges to when we emerging get Vision makes do supports some of we'll opportunities. was XXXX, doubt differentiation things ahead developed us and and growth, advantage we any

it outperform. hold to people, of our our management My confidence know entire and firm, as look can lot objective and overriding XXXX, from that ensure excitement our continues and of position even is success team about proud a what for to clients may it Vision that, Allen investors. our to of I strength. contemplate Booz gratifying is more we As with future We next under a what's to of the our am

overview an quarter. to third now shift our of me Let

fact on in quarter of thought said, revenue half, another The excellent first fiscal we strong delivered when with performance and year. continued we a would great has ahead well and us numbers track generation. for team ADEPS, exceptional a of conservative strong and keep growth profitability, Our planned latest be relatively we a this second year, half. expected We we more where cash

pipeline fueled and Our that third a are pattern. future consistent quarter strong signal market this and with to hiring capabilities, book-to-bill demand year which growth our robust continues opportunities. for of The has

this uneven across noted more As our quarter, years we past. has last year growth in business than been our

representing exceptional. the performance of months. is Their defense three-quarters nine civil portfolio double-digit are markets our delivering growth through Our and first revenue

is intelligence the of tracking and roughly for mentioned has re-compete by constrained business global our the cleared contrast, been our we for By flat talent year. be commercial business losses need And to a still previously. couple

We advantage are business take proactively excellence. of and of single portfolio winning with those business them Because and continue we resources addressing on to model. the can most our a to to diversity at of the focus talent then delivering shift of P&L, challenges. firm, the and as we our And same time, the the we importance strength operate opportunities

support large expanding, our and jobs Our is requiring to have solutions technical demand ample we pipeline complex objectives particularly going forward. for

set thesis, we a confidence As of for year we our of lot we the that meet approach ourselves. final can objectives ambitious have the we three-year

we really operating power our anticipated pace. past and at the of get used had results operating objective, here ahead seven stands growth capacity margin we and have heavily what means on thesis And than differentiation the significant investment our the sheet growth Against have revenue path to out balance is the of relying available. XX% we quarters, Looking performance. ADEPS are from core more still we

business models the potential to also that forward further over We continue option growth. value lines business and the with long have move These fuel are to capabilities. new term

present keeping long-term As I Allen our in for and growth, near We before, in we and value and so has and foot future. stakeholders. continue by the to succeeded century, investors intend all a one that to more foot other Booz evolution our deliver one said the than

give I'll that, with floor And Lloyd. to the

Lloyd Howell

quarter would plan through the year. excited another if the performance budget there performance. fiscal we we executing even been yet had and another that front-loaded take fantastic To be the good Thanks, I'm for delivered of disruptions. morning, year, Horacio, full you strong told At that, everyone. ensure we you a of to beginning

the leaders into have strong Our extremely executed carried second well against momentum half. plan and this we

view through December flow full cash the increase performance of our guidance for will to financial our and goals our the we looking Our us thesis. achieve year that and gives revenue fiscal confidence investment reinforces year year, operating fiscal beyond this multiyear the ADEPS

were increases continued the third sustained due compared through successfully revenue excluding XX.X% and X. client go ability quarter and topline, at to revenue to and respectively and Starting Slide turn our by expenses the delivery to to talent. grew retain year. demand hire billable last the The X.X% Please Let's on numbers. primarily

revenue largest the year nearly delivered also compared of in strong X% period. revenue to delivered growth including we growth XX% our Year-over-year, prior market. Defense, results Civil

As have year. portfolio the organic cleared Horacio year as delivering we highly continue talent. compared Its done by challenge X% fiscal finding mentioned, far business prior revenue intelligence well-positioned our this somewhat is our of Collectively, to industry-leading constrained growth the so remained to expanded of period. businesses

times. to Book-to-bill Slide our X. and turn in times X.XX trailing was historical XX-month is quarter X.XX Please at with line the performance for figure

enable the quarterly in we forward, of Vision of business. larger, pursuit solutions-focused increase in more volatility Going our backlog expect existing work our a addition as to in complex continues diversified base XXXX to slight

XXst of X.X%. year grew to Total by was priced backlog $XX options X.X% billion. than backlog increased higher and X.X% $XX.X Funded end backlog at of period. the billion the as $X.X prior billion at decreased $X.X XX.X% Unfunded December billion,

signals. by encouraged these demand are strong We

This Headcount by XX,XXX growth year. X.X% target consistent XXX during or our year-over-year. to for approximately headcount the quarter X% about with the grew is

top We be unique to are proposition. to Allen's that talent value proud Booz attracted continue

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

our an adjusted third had fiscal year long-term quarter we margins. XXXX that to reminder, a As plan benefited disability adjustment EBITDA

for this management work. performance, business, focused line and higher-margin shift performance an multiyear quarter margin low to continues technically in our expectations driven strong ongoing strong the towards Our efficient be contract and in XXs is our margins by with of

by net million. decreased $XXX XX.X% Third to million, increased income quarter adjusted while by to net income XX.X% $XXX

prior This the effects in increase net As $X.XX reform. quarter translated benefited by improvements income $X.XX. in tax adjusted in operational share year to income per net was a adjusted driven from increase in of earnings third The reminder, an to diluted the efficiency.

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

the had process generation XX% in million, $XXX to point cash. cycle, at cash ahead $XXX our of year-to-date total collection to to Turning quarter our we quarter generating cash this we improvements conversion strong million brings a year. anticipate cash, this where final This in were made operating we cash we've strong Due very last year. the operating primarily during

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

slide to turn X. Please

to in from capital during During to We returned $XX in the to thesis. XXXX, as committed quarter, share XXXX targeted investment through million deploying the our and period repurchases. year remain billion shareholders our fiscal fiscal we year outlined dividends $X.X

will order near- value deployment unchanged we and capital long-term to Our patient continue in shareholders. remain and disciplined be our and for maximize to priorities

payable dividend on Directors is illustrating to emphasis our increase dividend this to increase value authorized of quarterly the February of shareholders. for our quarterly the mentioned, XX a our February create second as component strategy on has Horacio place to XX. the we on Board share This As a of $X.XX stockholders in dividends year, per $X.XX record fiscal in

balance Turning sheet. to the

During maturity B. its the also cost the third while XXXX. out term modestly quarter, our refinancing reduce of of our we to This transaction term completed loan, the loan extending

XXXX, While a goal, track thesis, ample and achieve way. on growth in sheet gives to year target optionality meet balance still capital we operating delivered investment are fiscal ADEPS our patient performance means to the deploy capital we XX% through our strong to launched retaining we while have our deployment exceptional capacity us our since disciplined

Concluding with turn slide guidance please to X.

the above XXXX, we year, growth expenses for that by falling part year now being increase near year. between fiscal or For for will anticipate revenue fiscal slightly XX.X% billable driven and XX% the be the full full XX% in

to of between operating expect while million. per $X.XX guidance are we now range increasing ADEPS also to share, $X.XX $XXX our We million and cash $XXX

that reflect The XXX may Fiscal tax for a result million based research new margin XX%, to XXX in million adjusted ADEPS development reaffirmed. quarter strategies range and is outstanding of XXXX does fourth EBITDA on not range average tax weighted which benefits. is and in XX% rate to the guidance year shares potential

We the ADEPS cash outstanding because leaders flow pleased our operational and are again to guidance performance delivered. revenue, extremely increase have of

deliver we investment the of thesis strong We year are goals are to our multiyear fiscal reach. growth continued within the well on track envision and this

lot We future. are executing us gives which and of with the discipline confidence a excitement and about excellence,

let's for Nick, questions. up open the lines

Nick Veasey

please Daniel, lines. the Thanks. open

Operator

from Instructions] Our comes Kahyaoglu [Operator first with question Jefferies. Sheila

now is open. line Your

Sheila Kahyaoglu

Horacio, Lloyd morning, Good you. Thank Nick. and

So good results.

Horacio Rozanski

Good morning, Sheila.

Sheila Kahyaoglu

you. said think needs strategy. over on the in XXXX question do start has next how for a you executed of defense How evolves a team term? we kind budget outlook, the With about XX over The remarks longer changing the a customer to pretty difficult the more Booz you about Horacio, do of your Vision how backdrop prepared think years? as the in positive

Horacio Rozanski

to Thank started. get question us great a you, Sheila. That's

this look in When to technology start as really that the now a we the are XXXX really success a firm our been working shout-out I that the to that federal was company, year this the us the The First the that we done leading report report you of to from for to it. increased guidance, positioning translator for this and and business, that team. at shows is as and their has government it's insertion leading momentum quarter I with representing. that tech all all, here really strategy it Lloyd lot outstanding need has of the our numbers position transform work

to see talked that the are to And fact a doesn't still. We to readiness we going and we've standpoint continue. technology past. be is the both around not to sign every trends Great power the points Allen fact XXXXs. that the -- competition a in see we from something are Everything XXXXs in the federal like modernization operate going we appreciate next anticipating about of that just stand the the Booz The something market the to front market and we invest we we government continue to it and the of talked sure is be past. we're that over transformation shaping make believe are digital the need to years, waves about Those reacting that the are XX the of not we ahead in. in

aim But stay As We trying result remarks, a said be aim mission little innovation we're doing driver create terms, general for our I specify we of then that some financial to of continue been we've the around ahead a in in and work more. seeing. curve. this clients to we in hope prepared that to to kind the results a to as

Sheila Kahyaoglu

investments less And Yes. that increase. and with X% but up discuss results, leverage hiring Thank you. profit up in needs XX%, was puts takes you follow-up given maybe and that business? ex the revenue solid to operating billables you financial to the as make than a Can operating coupled X% model on maybe with business a need maybe

Lloyd Howell

I'll start Sheila.

And for what it's – that. consistent – doing remained has onboard our the pretty to need been demand as meet to that in the continue of talent we're the success successful clients, operating being we at leverage we Our to the past.

expect the it same going where and we good remain forward are. feel So pretty about we to

Operator

you. Thank

Our next Copeland Carter from Melius question comes with Research.

line Your open. is now

Carter Copeland

morning, gentlemen. good Hey,

Horacio Rozanski

Good morning, Carter.

Carter Copeland

theme. around Just might a you little being technology wondered insertion I bit, expand the remarks and that if of concept prepared this Horacio, a

move a somewhat to need has clearly slow been there's insert Although, stodgy there, customer and the to technology.

the interact change? you really see in I So I your they just for change with how or how of what is customer the to change could do, expand business do on about, wondered evolving what in model if – as or terms invest enact there you you that that you think a how us. you difference you you help customer

Horacio Rozanski

example. sure clients We've the either people so. pent-up the Sure. new of forum have a watched attended panels call I'm that last Reagan been do to technology fact opportunity have talking begin insert quarters with over or the December last actually our more lot about few stability need the a to on for budget the defense to the at who had

more when that all DOD, a listen power all a dozen the decision-makers of importance about policymakers of players, theme What technology gathered really industry together than you struck the in on the consistent one this panels key and key the serious me the all seeing was competition of and to in speeches great that way leapfrog panels, as the to we're business. included our

great. work is the what notion – already I the are dispute being If numbers. me get has our our to inside And But growth don't that. numbers this of inside totally tech is is revenue translator. more you what's aligned important those excited

example, we systems using and GPS modernizing So for Force the a Army. Air where virtual the we're across reality advanced for the program training launched just We're for Navy.

just like have units almost from many protecting are mention too not J-X, the in mission-oriented, the just Defense cyber broadly AI and not platforms more networks. but We operating where we're that the places programs programs in many to FDA

trend. We last do We able because believe the on and do innovation position believe to Allen an capabilities and that Booz are over to years to to accelerating relying eight our clients continue is eager they're built the be we've so. that the

speak to sustainability outpace to position. gain share to speaks the we market of with I probably our our shifting future. market budget speaks why into the think even and So to of it and continue position the It also market will scenarios resilience that the

Carter Copeland

little lately you're if within terms any count there's you And wonder, – any follow-up attrition Thanks. speak in Great. growth, might head that? been of embedded change a if what bit the and seeing just as I a on to

Lloyd Howell

by that year we expected the at Carter, the our of to workforce we said X%. beginning grow

to at half the uncertainty the that. aggressively – tracking we're more first said to were the going time, with that, of come budget also and than we given We the out

So in this think we X.X% were quarter. up, I QX, X.X%

of So demand-constrained. tied also to tightening has We're growth we contributed with we're seeing exactly our not sort expected of track that with to are and performing to and head that patterns And raising expected deliver also normal that. count what us we we're attrition on the guidance.

Operator

you. Thank

Our next question Joseph from comes Stifel. DeNardi with

is Your now line open,

Joseph DeNardi

Good you about Horacio guys. talk a the… bit morning. little Hey, can more

Horacio Rozanski

Good morning.

Joseph DeNardi

within The Thank address the been of the Yeah. And of late? that count challenges what strategies of head side morning. kind business? you. to the are getting Good intel better or worse Has that?

Horacio Rozanski

Sure.

this ahead of just bit think little a mean, business wrap is look answer to the give a our the more a you year. for expectations couple me you I are expectations. into internal is reported, little if we intel at as dynamic and intel. early when in you that lost defense has context, deep actually Intel re-competes. of around than because And is saw as that behind we I Let year bit ultimately of the our an our civil dive

be to get the where to We very we're so year efforts. this there. not ahead rate. actually have get believe it. to our recruiting internal it caught we And demand hired order to right And we in our plan above back that actually hire we actually focused is at take advantage fiscal to get planned did We of want on of for our now and up accelerating

going important interlocking also be one for it the at more we instructive changes lose to of working part to not or There already as and out that portfolio, to the but the to to as the think not We've run silos. business pieces. because look to the entirety the business divisions some is it's back of forest in I come made want I to that and it's really hard. come trees run approach. we're do We important, our it's

business that takes other that that that this they demonstration then is intel of keep actually me when seen helped together the of and which the in in that's redeployed fuel case, the the in – implication us business, business the or particular of the and was the parts some Lloyd skills parts it in clearances honest. of have. And talent was we've because you that actually all And other to the year earlier put so the our to of growth

is guidance entire first year while this in the time our the think where digits. I double a range for the is revenue in

Lloyd Howell

Correct.

Horacio Rozanski

portfolio of at talent look the So, good really base at important it's really always because that totality really the is one basis. things has our portfolio on the we managing been to of a

Joseph DeNardi

is. I then years, the And sustain Lloyd of investors growth, in had of ability helpful. have over your to the because strong how couple past confidence That's book-to-bill organic think the

a of that? little kind any that. bit as talked was. in But point it's to as protests Thanks. You or little about getting of it just out there delayed major opportunities Are affecting strong larger terms factors bit not that's a

Lloyd Howell

And that X.XX see Sure. ourselves is said at a all, well. X.X% with our in fact, pursuits demand-constrained the seeing team where pursuing record as awards. we as is certainly in for volatility this those we're looking as Joe, at complex $XX more line little larger We're in last were But backlog QX given don't the quarter winning we bit quarter-to-quarter we book-to-bill remarks, technically up our doing more year. to great on billion. we're and prepared

Horacio's backlog So the raised fact guidance, supporting opening that we've our and tightened we to that. see comments,

Operator

Thank you.

Company. next with & from von Our comes Rumohr Cai question Cowen

Your now line is open.

Cai von Rumohr

much. very you Thank Yes.

and transformation. think your that being would mentioned case why priorities market I drivers competition the the to case, among Horacio, the be digital highest Is would again market. That your not? if target great power So, that not, key of you Intel the being and

Horacio Rozanski

a is highest priority. I don't there that know

in you when of market in Intel. clearances opportunity. in there. that are see the look as lots talked portfolio We think all constraints the we've We level there's of see before, real clearly required to it. opportunity about some but there I And of the work demand across elements opportunities

those shift of right speaks terms about the turmoil need of and some in tremendous trends. that address Defense things some to the of in political I opportunities the power both you and having if great of technology other talking to was huge even to need most But the before, competition recent

everywhere and the to the the IRS, the it. the need And technology, to the VA is government a we're technology portfolio, on target-rich translation from in new technology federal for need civilian modernize this for insertion for FDA environment then to -- across our

Cai von Rumohr

business than Great. that to able And really your going programs. with the in How been been? so you're bites you've Historically, bigger basically complex other your greater strength that are speed of larger move on focusing you the has strength many after and was you thing mentioned on more been IDIQs some of historically smaller win of where kind competitors. does fit elephants kind chasing your has to with

Horacio Rozanski

We're -- words. actually elephants use and create programs that that always that vibrant this liked. midsize tremendous continuing of the benefit not moving very economic doing we've bigger that to core of have the chasing is to around for your to value business the rapidly, What clients all still we're are grow these

reality of as the closer that clients' the more other I get the do center technically is mission, you think you to complex work.

and is programs. it have them capturing at become billion-dollar going good of quite and after competed we contracts Some in larger this

for we're to create replacement an this add-on not that seeing what portfolio. in But and the balance that's the seeing. you're growth you're doing is It's a why

Operator

Thank you.

with next Goldman comes from Gavin Our question Sachs. Parsons

is line open. now Your

Gavin Parsons

morning, everyone. good Hey,

Horacio Rozanski

Good morning.

Gavin Parsons

products? be or or in whether be even something been participate hardware follow-up to software to just talking platforms that defined. of the curious any like that GBSD emphasis traditional to kind competition the traditionally have whether wanted B-XX bigger technology question in opportunity I hardware if on partnership with earlier you're when a you programs see what and on I'm about or shift Carter's

Horacio Rozanski

have these before, been our and to for years. more work oriented management already program And whereas is is of might many -- those what's these have some be -- of the actually in technically We side. delivering more on been to seems programs we programs evolving inside happening goal are

trend see and that continuing So and intensifying. -- I

again software, a open moves architectures As greater the value government. become from interest hardware to to of lot of the things like

more these is government element a important that platforms of Cybersecurity in. becomes investing the

in participate scaling see our we in programs. these opportunity of So, continuing fact and some presence in to

Gavin Parsons

think still guidance conversion it. then income. cash you net I Got I mean here even implies raised it capital, XX% free working And around after on on

this So, drag looks still a has it big that year. pretty it capital working like in

And over to drag? correct stabilizes me the do lessening a a had bit but working going forward past metrics if see Thanks. opposed years, seem you of result? wrong, as mean as few acceleration conversion cap revenue better any growth that if of free does cash you've those a And the

Lloyd Howell

see mean well guidance have with way. we're deployment ample Yes. the sheet our fact that to the we balance strong our around needs. we I that meet our we've we I capacity cash, mean raising as got operating needs capital don't it as now the that operating feel

Operator

you. Thank

comes next Raviv Citi. Our from question with Jon

open. is now Your line

Jon Raviv

going Hey, Gavin's little thanks. Good I'm try morning everyone. to a different question bit way.

maybe and as to to With out a the Reagan. this and are up investing some assets if like technology trying maybe in almost mentioned to extent will software plus hardware that you certain software, you space hire or they're may they trying seemingly left always blurring about of or Horacio between and sense catch of acquire and the lines feeling companies customer software be in the talking hardware respect? at what perhaps To you do

Horacio Rozanski

talk them their let businesses. I'll about

our from there's what addressing like into you a there our driving value. in growing that in I we've of needs doubt of are is work these that going think but value chains Things opportunities see traditional perspective Modzy profitability. new that there's Again tell value both are in believe as they -- as business kinds also doing to opportunity. to the that's is option are that nobody so I theme interesting no value there's programs the part And continue digital our we to is interested opportunity can described that's that why as growing the And we because actually been and of I probably why add is market frankly us. -- before. grow continue and

really to this fuel our going is there's opportunity potential think is I going think forward. I -- so And what

Jon Raviv

you And set my follow-up. that. Appreciate me for up

lot On you or the the still uplift option to Thank answer of year, prime like we're how option value, I a is and sometimes, this Rec.gov? much in you. know Modzy it's think and Defend do from seeing value, District things growth but hard of there's

Lloyd Howell

but us Those back Jon. as us bridge businesses. degree business relates to about look Still grow to start to the basis. which, early merit the certainly -- to it to I'll business. application the that to the what our the with as we're what initiatives for back too these at that leaders Yes. strengthen, our a that. main and business off say as doing potential We it more of portfolio Modzy on certainly of into initiatives for as well well, as parse have defense doing in portfolio continues And main see intel we'll to we're and

Operator

you. Thank

Our next comes from Barclays. question Akers with Matt

now is line Your open.

Matt Akers

Hey, guys. question. mentioned anything Thanks watch those these guess of recompetes. that for I intel headwinds morning briefly you on mostly big out for earlier, there wanted behind Are in some is I or us, of touch good future? or the of just the the to grow to backlog And talent? maybe is going matter Does headlines kind right the more count faster then you finding running security it of the forward, help the on these we side, that see a all head of clearance down. kind

Horacio Rozanski

leaning some think be of be don't to your that everything, get strong. of part it. rates to and getting us into in goodness Sadly, but we very still actually question, occasionally there's win in would work continue of our we're I that, we're first the XXX% for On win that hard forward

of proud things. and taking what and up that's I'm those the think some team growth for swings of I opportunity drives

made this reform clearance level. conversation of the with and macro to that at topic we've is the policymakers and with been progress thing, part glad see we are clients on the being On

improvement the easing of to year. anticipated those the the on things the haven't on of marginal But I level, the to some the as clearance at crossovers that but movement. main, revamping real supply. for There's for X% our still before, head At our is going we're recruit see whole early we're we to still way the a we it's and us markets seen an and be key count like any that, growing times and too ultimately said into for still

So pretty we're feeling good.

Matt Akers

EBITDA kind guidance margins. your in third for I the looked you sequential there about fourth quarter talk little you margin decline could quarter, the guys I fourth second I quarter? big then think and decent weaker. of a a just pretty And Okay. I then if between is just the thought kind Thanks. But on half if bit typically implies could of dynamics given that briefly in guess

Lloyd Howell

well Sure. At the you being our in to with pleased the broad-based. level. through us line of much On operating and extremely It's contract top FY top very quarter with though, performance we're low for XXs able it's of it. that, also expectations margin our at sustain XXXX. see We're this

pricing, got improvements life as our in systemic as contract well from We've cycle to delivery.

execution perspective, have our more but so is and the typical as XXs certainly our on clients' working, low to that. There from of we forecasted track to we So technical forth. mission, year, pattern to to we're our the and be performance, margin work, expect it's content closer seasonal in the do a

Operator

Thank you.

JPMorgan. from comes Seifman question next Seth Our with

open. now is line Your

Seth Seifman

much and morning. good Thanks very

Horacio Rozanski

Good morning.

Seth Seifman

intelligence. about question another ask to just Horacio,

some of the actions about the that win anniversarying taking half there, guys recompete think the acceleration we to a these of you as for losses outlook and of there of it more, back and we maybe is year? about are kind look next in should so, we matter growth Just in think

Horacio Rozanski

too we ample put things. I a line Like time on to It's said soon demand. see before,

rates historical. overall win Our with are consistent

with on that beyond it historical need and it. we're is to consistent hiring accelerate and we Our

know as stay share We're we hard to we'll fast as when So can more. tuned. work can this and as we as going we and more

Seth Seifman

attributable on just fairly right implications this Is And with high. the thing? kind it there percentage a the was That's sales, kind the fine. Thanks. one mix just billables, are of issue I the a going quarter forward? that of quarter high timing is… And in it think, what as that or finally, reverts, of to was in and

Lloyd Howell

We from little billable little expenses forecasted as we year ODCs had business defense requirement XX% and related subcontractor that, performance I'm originally it's range but a largely outside elevated the to defense -- in strong well for Sure. part of between and XX% sorry, we the forecasted. to the of forecasted on that, bit given -- be to expected part, our as in billable a elevated business driven our bit the

Operator

you. Thank

comes Credit with next from Suisse. question Spingarn Robert Our

open. line Your now is

Robert Spingarn

Good morning. Hey.

Horacio Rozanski

Robert. Hi,

Robert Spingarn

of couple A things.

far upside. but EBITDA Lloyd, had flat key you've commercial Just, margin mentioned said year-to-date, I so one Horacio business drivers of was the for also that the think that's

just on that quarter margin in the improve, And based ago. so want going I the to but this idea contracts a moment that's reconcile fourth to maybe the comments

So at we long-term start how implications the accelerate to do what if all? for EBITDA think if are about there that? doesn't And margin commercial

Lloyd Howell

up portion time low but to is, price we're with increase our an also Sure. notice margin by performance to the tracking the strong the work. pick way only we're our I on that first cost-plus not offset for XXs fixed which pleased you'll is the think, there's and and execution portfolio, this our in that material the that Well, of year,

that, of contributed more a that's higher to technically addition also that. comes continued In to focused the our with sale work margin

in have are years this Once to stronger will, I a commercial, or return side of contribute for that federal us accretive performance, after and it's strong be out happens, operating growth year, -- to from said business. our the to of As expecting previous expecting regarding what regarding the low pointed to we're with we we in profile mid-XXs four the perspective, XX% growing our future. calls just that growth, still our

Robert Spingarn

of opposite the quarter. or in maybe in technology you were a what Is low. were sold revenues, They high the then, Okay. to is of of billables the And related of the that on very there? said there But function cost part the something just the is else goods this billables side.

Lloyd Howell

high of the think We part No. billables. its

Operator

next Caso comes question Wells our Edward with Fargo. from you. Thank And

open. now is line Your

Edward Caso

very I September of had is Good historically question quarter. to sensitive the activity. morning. a The pace award fourth around government Congrats. the company

back there election up, going this Allen With that Is the your Thanks. presidential you history? coming can Booz number more quarter? September spike cycle in look for challenges in to hit be to

Horacio Rozanski

been guidance over two-year Generally see. approved. that deal your I'll the see don't The refrain soon our to election speaking, to the or a that. wait at pace year and in business. budget the there's about challenge since And outcome so any too years we start to for the bigger of It's after settled to gets we'll budget the -- next there's which from talk few of question elections well last have and has until

have and both our we said, the for crystal as We're ample on to there's continue. for services. at expect Lloyd goes the In bringing meantime, least as as we demand our I that -- ball talent strongly. And far

Edward Caso

of other duration awards. My around is question

that portfolio And and dollars helping getting bid curious is duration the your further? stretch the if longer. Just proposal is across

Horacio Rozanski

Yes.

limit three the I is years remember you to think and is -- the the years. short form few if answer back, decided of try of things to the parts a government

help government think that that a didn't the it for was good and move not I industry. certainly

to the we're think I lines. historical back time normal more

so awards averages. to to see be we've prime up of seen length And sort We're that historical happy to continue. that and and stable will of hopefully

Operator

Thank you.

comes Our Tobey next from Sommer with question SunTrust.

now is open. line Your

Tobey Sommer

you company? as spending of the what I goals be a Thanks. to aperture headline pull budget wanted kind growth least that your the think versus how applicable to about may of next more long-term do Thanks. kind of financial perspective might funding set from you back. And peak look at at be,

Lloyd Howell

Sure.

our the to investment increase and have said growth in low of XXs X% in in at expect line be margin we we top that to thesis, ADEPS. XX% X% terms As of onset

with we that take into Given account. to forward budget to the the best the going try uncertainty abilities, of our

horizon to of our hesitant investment the I'm So look thesis. beyond

are underway We strategy. where have work our we evaluating currently

that will account. budget But mind, We performed the and environments uncertain in has firm past going in do well and keep certain so in we the expect take to also forward. into

Tobey Sommer

bit are accelerate if give a As in commercial a around you follow-up, could the more growth color what wondering your just I little was plans to area.

Horacio Rozanski

out was double very pointed growing We that this have strong at before a digits. business as Lloyd

-- and it's down. It's it's have wound with contracts the our rest mature less few overall more portfolio small of it will experience portfolio, so the X% a than We business. volatility that of

But business about looking that into part the overall continue we future. as at already we we're there go we're expect strategic next of optimistic We're the expansion to seeing where what review. do and its

Operator

Bank Our Instructions] comes Ronald [Operator next question of you. from Thank with Epstein America.

is now open. line Your

Caitlin Dullanty

looks it According a Hi, the $X.X Ron. the recognized Can debt guys. XX-Q, This million earnings? in to your is discuss you on on quarter. of Caitlin like this had reversal for bad impact you about

Lloyd Howell

a It's part operations bottom line. the a to our of impact normal hasn't It material financing. our had

Caitlin Dullanty

new be then business you can and the specific contracts discuss Okay. Thank we you. opportunities? pipeline Anything And recompete of for? that out upcoming should watching

Lloyd Howell

year. doing is future of the fiscal we normal different having We sort FY guidance well shaping in in of see are team raise than in of given optimistic the very -- opportunities. our we our don't where XXXX. strong anything point It's remain And a No.

Operator

closing gentlemen, turn back and would Ladies session. you. I to this question-and-answer remarks. over now Thank for to like our the Horacio call concludes Rozanski any

Horacio Rozanski

a Thank the we're your Lloyd has very to and what for everyone questions. year, finish I you the accomplished. and look to forward of strong proud firm

to the sustain clients. shout-out to an to job. taking evolution our team as morning thank be Allen's this a time Booz hard They're and do continue with Again, more I to the day. our entire value have us you as for growth want exceptional a to for delivering One and ever to working unmatched time by great

Operator

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

disconnect. may You now

Booz Allen Hamilton Holding (BAH) 31 Jan 202020 Q3 Earnings call transcript