BAH - Earnings call transcript Q4 2020 | Booz Allen Hamilton Holding Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Booz Allen Hamilton Fourth Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After speakers’ presentation, there will be a question-and-answer session. [Operator Instruction]. Please be advised that today's conference is being recorded. Instruction]. [Operator

to Thank over sir. you. like today, your the Veasey. Nick Please turn now to conference speaker I’d go ahead,

Nick Veasey

you. press and thank Booz and you’ve morning. had earnings Good joining to hope we Thank for read issued opportunity us this the announcement. you We Allen's that fiscal full for quarter an year release XXXX fourth morning earlier

Investor presentation now Veasey, are: also and provided and slides and of on Vice Chief Lloyd and X. have website business are Executive Executive on Chief to We and Horacio me Vice Financial Nick Slide I'm President our President talk President, Relations, with and our Officer Officer; Howell, Rozanski, about our results financial Treasurer.

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

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

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

now We Slide X. are on

Horacio Rozanski

good been your Thank safe call. you, like and memory, weeks the you, last since that have eight But and colleagues Allen's your ended. that transpired It’s has then. we morning, for feels we Nick, joining distant healthy March families I since year been fiscal everyone. Thanks and Booz given all a XXXX since hope spoke.

deepest terms of has have the drastic, Our Booz anything unlike all our world, have respond families. loved workers most have our Well, first institutions those been ones to and steps us our our and From communities, every heartfelt us frontlines necessary actions. to economic lives single person to Its pandemic. ever with to Allen, taken have nurses experienced on doctors the essential everyone lost their and and inspired toll who to responders, at lost COVID-XX and condolences in and gratitude hardship. illness, their of

way live COVID-XX Without has the mobilization changed against a we worldwide and dramatically work. the doubt,

approach and providing our I for morning by of outlook fiscal themes, XXXX. Lloyd year begin this discussing response forward. fiscal Allen's build going and year while performance these on so, our And XXXX will details Then Booz will the

and of committed the globe, the Reflecting immediately crisis to February, foremost, spreading and when back protect institutional and COVID-XX to began the a people, overriding to health of their response to three Second, our early the financial continue our third, critical across families and clients; team communities; resilience organized And of our our firm. First to firm ensure missions priorities: safety our and supporting

the and took by Booz adapted Using could turn, March Allen’s XXth. in containing their also and of responded on contributes in program, anxiety by will to bold telework since effectively our of the how of new our to resiliency. on including then, help Xst. growth people at we outcome creating this This the Allen’s into move caused mandatory We and April that resilience to those job a clients, decision the preserving These channel I the and a priorities have guided vulnerable and were announced action, to our most and relieve increase crisis allow funds energy center They while non-personnel stress believe costs. resilience our every security am it the quickly meeting $XXX team in initial our benefits, an communities. talent pandemic to needs directly pandemic reality. fund, Booz how well proud reprioritizing expand million and our early

we we continue distinct operations, think As three about about our phases. adjust virus COVID-XX in the and to learn

The encompasses And the I through it's April. now us, of roughly crisis behind the first phase described. from just of the response January end end

is now and by characterized weeks in with considerations second virus health health will the be threat early and many different for We economic treatment public vaccine levels organizations. Allen’s last the to inside or which no locally continued are institutions made varying a in of Decisions at is a largely phase, proven -- It place. from months. likely and

The changes third and controlled pandemic. begin incorporating from ultimately emerge, a that to We when social new result and lasting the virus final by vaccines combination the immunity. some of normal will phase is expect treatments,

view and a that we opportunities new of now. this source starting and business, anticipated a challenges be As to need as considered

our we not key fiscal we've also people, XXXX, it. through own This with work want Because the decisions but and day. to much of our of safety health priority. year we phase The workforce those will every about I two only how made encompass will includes manage summarize remains top total

safe about return. with approach, which clients We calling begun have are we our already talking

phase, During continue this telework. we to will maximize

infection Across and is shown via teams collaborating experience reduce incidence effective. contracts, remote hiring that highly has of telework. missions, disease, talent, capturing innovating work, delivering of against firm, Our does it and all to-date not work the also our spread are only advancing

there from like for to client. with for own telework options local ensure help plans by are we return continue will distancing safe safe as few as that classified at effectiveness are advice and a where in facilities. particularly high recognize policies, while and rules, travel each Great maintaining federal, well those is social Guided everyone protections of things very creating we consider their we'll safe We to cleaning These and its plans missions. with have we plans healthy experts, cases, In also return clients these critical in some with state execution return collaboration our keep restrictions, limited. to missions, cases, believe risk. and these safe procedures, work

are antibody testing conducting benefit employee contact we two, phase fine tuning tracing, protocols, programs. and of piloting part As our

much effective. can like so but are And is strategies mitigation in prove and most managing we undertaking, we critical we phase complex all a that This the hands are deck. one, costs, on execute

the and to the virus Looking over, is controlled will and Booz road, COVID-XX. to pandemic society is back after the not Allen were therefore go things prior completely further down how

doesn't growth already directions faster already and mobility We as Allen still, reshape of we our changes are as next strategy. Booz solutions, to tilting And learning, virtual themes, for emerging secure telehealth, adoption demand. in since stand seeing such those These we're ever are develop example. beginning

because that year is key Turning dedication. now footing. to strong all trend Booz technology to current interruption. outstanding of it talented operations, integrated must it Fiscal respond not met another demand that again, without financial underscore year to to we to financial Once while of of and the and continue grow. serving The were our important the our for strategic with quickly was we continues clients of work XXXX the And able much and objectives COVID-XX our passion our so team, Because has our fuels to business for solutions is financials challenges mission-critical, Allen. changed.

to whole turning and health changes to the us, credit environment. maintain are the us grappling emergency communication levels, I began, with all support at specifically pre-pandemic to of Many And teams government's clients. productivity Today, are in our our what new to requirements have like constant response. related clients. and operating missions our in a we COVID-XX Since for unprecedented we've new they're with been of rallied

In fact, in to supported by everyone's with who partnership developed our critical maximize via facilities into billable about of delivered going XX% people is still clients of safety. work specific plans roughly are XX% our our telework. And being are

business work and agility, new leaders aggressively hiring managing opportunity. resources realigning more with against the Our than funded the people pursuing positions, are areas and to need X,XXX and and sold greatest of

I said times business As many of is model. advantage the our before, this

any as Our allows crisis or in to us single are Throughout we disruptions, it team. one together. P&L operate

the sum, very of is the pleased business environment. has to management In with demands team the today's how adjusted

confidence fiscal We momentum. and with year have entered XXXX

technologies, delivering and generation. cash organic us our We in and to the shareholders. growth allow expect people another investing of for option strong to industry-leading to future revenue deliver This will value opportunities continue year and value exploring

current for effect once on more again Given Despite the second to our the environment, beyond fiscal and the outlook with are the government to the for expectations we we budget expect thesis. uncertainty complexity uncertainty pandemic half, including workforce pleased the of our the and year. in several our course first in uncertainty, a investment its unknowns, from the half. stems possible the ADEPS increase of have growth The strong

ADEPS 'XX we the we FY thesis the to fiscal guidance XX% translates fiscal Last year of a are goal fiscal XXXX to to envisioned end end ADEPS over from to XXXX growth announcing year XX% year range end The to that of fiscal year the growth period. recall that over growth the increased from of XX% XXXX. originally the XX% of You'll end period ADEPS today year, XXXX. cumulative the the ADEPS three the year

results for unique the strength The all credit firm’s they’ve resilience. work financial people achieved of our the position the of we've and the produced proof hard Their points and our fundamental Booz are market. in growth and Allen for best deserve the sustaining

and to the fiscal XXXX. year for over our the full Lloyd, guidance details for you year of

Lloyd Howell

recent react not that of but comment our risks Horacio, start financial to positioned I'll by this in the Booz to pandemic, emerge years. challenges opportunities track and and to This excellent the Thanks, from everyone. it. morning, operational good Allen key performance echoing has simply your address about record proactively and

the to managing government past long-term are have strength done We we like the in ensure as business shutdowns. things sequestrations budget just and with

in we generating as investing to our industry-leading allocating people resources and efficiently our are growth. strive We organic revenue continue

in highlighting will increase of our cover discuss will target year overview results this an first in again I the more year the mentioned, guidance, of our has thesis. impacts performance when three of fiscal Horacio expected fiscal but while as and supported I detail an XXXX investment growth Importantly, in COVID-XX. XXXX provide ADEPS year execution I strength our

both top-line, billable expenses excluding X. revenue to sustained billion double-digit Our demand results revenue year increase solutions, billion. while demand. and increased XX.X% in are services on of organic our grew headcount XXXX the fiscal This an Slide that and for to At shown growth to was X.X% result $X.X the $X.X meet

is X, Slide typical fourth is what than X.X our book-to-bill times to our which somewhat quarter Turning for lower QX. was

the during growing noted our have naturally in has earnings of diversified I book-to-bill strong our entered increased complex technically call with XXXX we investment we line volatility our last pursuing As This on enough are quarter, metrics. larger, the thesis year more of client Nonetheless, demand foundation small continue bids. awards targets. by with fiscal building to

not civil delays includes for has and in XX% recompete and year pipeline particularly in and compared up which to remains ago qualified new awards. fiscal our in markets. significant increased were our large year to-date Demand XXXX healthy, Win services opportunities in rates levels. solutions COVID-XX saw several defense

$X.X XXXX fiscal priced down fiscal was billion. $XX.X $XX.X options Total X% year-end times. Unfunded our full to backlog X% billion. up backlog in increased Funded ever X.X to billion. yielding billion largest book-to-bill of was grew X% backlog at $X.X backlog Our and XX% year was

environment. XX,XXX year, virtual by I the headcount, target has COVID-XX was was thus retain to continued Pivoting our growth revenue offset but we or had transformed And March as am has X.X%. have pandemic, with while labor to slowed efforts below employees, employee as our impact dropped XXst, the has with salaries already the X,XXX to demand year-over-year attrition more talent X% how than market. of headcount This half. our skill we up higher by in well and for And transitioned pleased the hiring due by to roughly far recruiting the sets hire

program weeks early retention we early fiscal hiring growth. on wisdom of such, headcount we're place resilience the in point the trends to positive the believe year As continued We seeing Xst. this demonstrates in and April of signs put the

solid top-line operational up driven growth, Moving to contract-level and the strong year. $XXX EBITDA our bottom-line, year for XXXX performance, management. the adjusted fiscal was This XX.X% million, by from primarily increase previous was

As a associated expectations, we $XX reductions result, impact and be negative are with our an temporary the line year XX.X%. million end may to our costs in to the This March adjusted EBITDA even in transitional believe billability EBITDA expenses, with related full charges year of not approximately was for with margin we recover. in These COVID-XX. in to able intelligence market was

am affects classified retain the that fee service our will this defense with lost EBITDA available. all Full to ready estimate work On have partnership well situation income reimbursed critical Invoicing challenging an a where approximately in we with begun I pleased of workforce is worked year recognize need this last terms a of certain be while and have will the to significantly. appreciate We keep involving This point, that we in our This clients, temporary, impact workforce. continuity per and and intelligence companies of concentrated shift in contracts need ensure is net XXXX month. the under that law has $X how ADEPS work. current CARES on ready suggests and also it Act industry. guidance and grew million that and

in $X.XX share to repurchase income net driven share per year in tax XX% up million. from per prior prior $XXX diluted in year. million, Net by income our $XXX lower and earnings improvement, rose And share to rate from growth, XXXX. year. due Diluted share revenue fiscal profitability XXXX, the a increases $X.XX was were year-over-year to adjusted increased from grew year the primarily program. to Adjusted $X.XX XX% a count effective lower $X.XX These fiscal earnings

development last QX, quarter. credits qualified tax approach rate, we and during tax to expenditures alternative effective our Regarding an adopted our mentioned identifying for research

income we As excluded quarter per which in result, net million diluted earnings reserves, share. and from net recognized adjusted of adjusted a approximately we tax $XX credits this

rate. we additional in provide effective the We guidance expect to future. this our included for credits expected tax method in the And have benefits

in to top range. at us year putting year, Turning fiscal cash, $XXX fiscal over representing the we million cash and forecasted during XX% growth operating generated our XXXX the of

Our and flow, year start at loan execution draw the allowed fourth of cash cash the to in year the draw strong $XXX revolver term on with the fiscal A operating delayed us hand. quarter million end

of run The and year Capital So far, invoicing smoothly government ongoing continue we due virtual to totaled XXXX material in million, to our experienced our delays practice with partners. to not fiscal expenditures in $XXX in have due COVID-XX. technology. cash the collections has infrastructure efforts our in we team and line expectations as invest

CapEx So, long-term spend on this I'll the address in guidance unclear. section. forward-looking facility At impact of spend is COVID-XX point, the

new resulted particularly flexibility. our an as off, balance However, operating capital tremendous area times, of and turbulent and as we operational performance well working. strategic ways strong, see a this we in it have adopt management these opportunity On and in where is This provides prudent is sheet. capitalized useful

X. Please Slide turn to

execute the a to quarter, strategy and near designed of fourth to In long-term both million deliver repurchased shareholder we quarter, prudent worth on $XXX shares. fourth continued value. the allocation we During capital

million. For price thesis a total first share. repurchased deployment bringing $XX X.X years million of investment the we we to $XXX $XXX shares of at of returned million average to during total nearly a per the capital of our through shareholders Including two fiscal dividends, year total XXXX, year, an

key reiterating our thesis. through of are deployment XXXX, we investment forward, capital Looking fiscal part $X.X target year a billion our

appropriately and Our strategic securing repurchases quarterly special share our priorities M&A, our remain: in reinvesting business, and dividends, dividends. price

of X% confidence our of in has for authorized that the amounts in our on important quarterly create of are targeted for future announcing year yield robust are the stockholders XXXX. regular the our its of value This which also extremely growth June our dividends, management remain proud share our we and fiscal a to growth rate strategy has XXth. record an we business in shareholders. on dividend and the thesis. to per demonstrates XXth component Dividends And $X.XX to XX% the potential, investment June to commitment reflects payable a Today, company

an Last year, year due half. an conservative in are federal And operating in in our first fiscal way. Today, environment. to time, guidance, I'll budget parts: unprecedented I similar guidance our more please characterized plan to XXXX X. this at Horacio aggressive environment, for and half, followed by second Slide to move an Turning a uncertain we two characterize a

We are phases actively managing through of the early the pandemic.

adapted but is described, into disruption. first early drive so missions that nation's fundamentals critical our year. posture, in there Horacio us As for that without have allow the growth that continue rapidly to full the government the and our strong partners half. performance plus under success extraordinary reduced This team into our circumstances, We underlying acknowledge will momentum remain a carry visibility factors our

unknowns our course appropriations more noted, the return whether priorities. of As typical a These post-election time-off use half and the XXth the workspaces, could our year to be the of fiscal timing possible returns summer and impacted pandemic, secured factors. the Horacio of after patterns second to related by include of September the paid status around of vacations, extent the and budget reordering

As guidance in are slightly the of years. ranges uncertainties, to broader a than these result begin recent our year

guidance as XXXX Our fiscal follows. year is

expect be billable excluding same growth expenses in to We XX% between revenue in and to expected range. grow X% with the revenue

approximately We work uncertain incorporates with XX%, on year Act. fee XXXX. expect CARES margin adjusted per the EBITDA be on margin recovery to invoiced par This guidance fiscal

based and to and diluted weighted in to rate $X.XX. earnings $X.XX the of per outstanding At guidance million the be This share XX%. range averages bottom XX% is tax million on adjusted a XXX line, we between expect to XXX

point approximately in $XXX are million impacted million finally, operating by cash, we to million. And CapEx not $XXX generate of $XX We $XXX to to which this materially COVID-XX. forecasting expect been to has million again

technology, our To being a move in and is safe we including facility decrease still will as current in strategy spend the invest to return. developed infrastructure towards supportive be continue while We given near clear, the long-term telework. environment, a contemplate term

closing, Booz delivering to for Allen year remains we fiscal pleased extremely of another on investing clear In be XXXX are financial future. forecasting the while and year and results. proud performance exceptional results of robust path a our strong

year business significant about is that as on a are our and We amidst finally, even focused in times. the uncertainties, management missions momentum people built unprecedented clients’ difference engaged the team entire confident the our have our as can firm ever. in And and make and optimistic

you. Horacio, back to

Horacio Rozanski

past Thanks, I'm out our been What and have communities. in how to making stands Allen. few Booz our of food to the face for to work for individuals incredibly Allen military you local clients with give supplement me our donations Lloyd. From to in in corporate months challenging responded three is our me to at together. rallied have our incredibly proud of making and contributions of The banks, carry responders how burdens examples. shines personal the have people firm, best country. other masks though and It Allow just and each their support well. we’re for the as showing charities work colleagues, first that need, a and families volunteering through Booz

helping of associates prepare and Nalluri the rural in our Health Administration brain data areas. surge project that is behind Sarvesh the heart the of One visualization possible a for virus the Veterans is

to build and Agency elsewhere dashboards openly other COVID-XX worked leaders and we of readiness. scientists pandemic available and time And map. at help creating the the of to Defense, her that our models will Sumiko own researchers global Health an now clock in She them One with that days virtual a soldiers pre-deployment Department Dr. on maintain Defense DoD about have is epidemiologists, Mekaru move live April, mandatory environment. in that a of this around six instruction, Since done that beginning keep the have is critical the usually while completely X,XXX deployed. course virtual of for to training soldiers team person a received safe worked helps

and activated our a mission our firm, Guard. Military cyber was assist to because in led [Monique at member I'll recently May of finally, security response, COVID-XX Month, many Lexington, others analyst She And a the the contact with is office for tracing from is mention Massachusetts. like unit. DiChiara] [Monique], a her Appreciation National

proud demonstrate a so of values, These are individual and to hard stories are We're to of and service We other or our meet her company that country the this many firm. her opportunity. dedication any to back. mobilizes work delighted and challenge have

conveys underscores for things stakeholders. our It three been past the together. and investors our it resilience, for very all our Over But sure. and has more mantra the it in value months, unity institutional importantly, strength create that

a of with the you close people thank I'll Booz So big to Allen.

to inspire your each each distinct It on work quarter. is amaze day. me and my You represent these privilege goals me

With that Nick, let's for questions. the open line

Nick Veasey

Thanks, Horacio. Operator, please open the lines.

Operator

Instructions]. [Operator

comes from Sheila question first Jefferies. Kahyaoglu with Our

open. is line Your

Sheila Kahyaoglu

you for Hi, Alliant good Nick awarded In thank Horacio, morning the the vehicle one Horacio, contract rather order support under Intelligence large and for and a X you DoD’s were Lloyd task is to Center. Joint the this time. May Artificial you.

this guess How I this just the second framework? to rather revenue I it? largest expecting like in us could you growth XXXX. think about if is think you program JAIC eMAPS for Maybe and award largest us, your tell relative contracts more you Booz’ were to-date about it? unexpected do this following AI was

Horacio Rozanski

Sheila. very competition awarded glad. and It And obviously part the thanks of to we're morning, pleased have Good been was just this the question. very contract. for We're Sure.

always it to a accelerate DoD Booz as opportunity or equally for I the is important these important. strategic of demonstrates case multi-program. orders workforce our size option the content a say is on And strategy to that we new they general task strategy As this in example of our and Artificial JAIC, proof value it's my these a leading point this our people another it it's contracts technologies mission Allen, I broadly, in great and And the broadly with technology is in of the support particular But traditional solutions calls create to our intelligence across actual to because case, in that’s an that clients. business as opportunity the around More and value of that the near care and our this artificial scales create. me deployment think works. to an to of is the the it's and deeply. intelligence about heart grow provider both they obviously

we pleased very very, all-in-all, forward to So look and more.

Sheila Kahyaoglu

I'm follow to going I ask guess related up another AI. to

that for focus you your COVID? item seems more next start strategy, focus impact do there planning the of AI? a veterans’ about a Booz, that's right Given COVID health on as comes tracing. is growth we larger to and how It think Is know I now the opportunity when it

Horacio Rozanski

when I got context. about put think you now, look like to in Right it's the all things you -- response.

are clients new as as focused leveraging rapidly that on possible. very existing They're Our and understandably. both technologies technologies

that's required the to is It’s have view, happy I to part why creating to going intelligence and work. data up need going And parcel this more we're information setting of to forward, so ready that But And importantly, all disparate I'm sources think the be and that. to that going at be lot unified my operate of long of and the this the things big instantaneously. make clear, are environments when is need our these of you in fused the also artificial clients, as real foundations you especially together, scale available look for a the a making decision this is in from be almost deal. doing run. both for we're

Operator

Thank you.

Carter with from Melius comes Research. question Copeland Our next

Your open. line is

Carter Copeland

the expand environment. of a gentlemen. that terms morning, demand in if you on little bit I Horacio, Good Hey. wondered might

Is talked to of to trying understand about directs of You that's COVID. in or partnership think driven that with driven? how reshaping. evolve? aftermath Who leads kind that customer that Is that you Just you? going reshaping the hand-in-hand

Horacio Rozanski

soon it's to of how evolve, to I I effort. think still mean all going exactly midst the response in it's we're right? first too of tell a

rethinking be more secure As we're I need And we of things is into I left, reality increased mobility, second is as this in that there's going require before to the changes behind a what That mentioned and view telehealth, of beginning how phase are to going that phase, then see. virtual us, adoption prolonged to work. hopefully of like training. a virus third phase. for before, mentioned the the things once we're going lot

of is we need is were to All seeing What has this. these our to are to Vision this in XXXX and our all these acceleration in XXXX works the are has center defense, of in clients’ beginning the help. at desire an relates positioned been -- civil enterprise things of already. problems. we're been demand deploy technologies. business that -- health we -- solve the from they This to want across bringing And we're our intelligence to technology to seeing be mantra, to the certainly mission again, and from new of And

Carter Copeland

follow-up Great. And for just as a Lloyd.

bit? change step qualification Any up? credits give rate. you can there the reversing a expenses in the us the that XXXX research of law tax mentioned on do and Thanks. little impacting generating You color tax the effective How much you ‘XX the envision

Lloyd Howell

Carter. morning, good Sure,

more areas -- our -- transitioning like more software technically As to the you know and in advanced area of has of engineering. been work related

our an expenditures quarter, tax a With XXXX and opportunity R&D mentioned credits net our benefit through going recorded that million with our XXXX, reassessed to had So fourth ADEPS. at excluded we analysis we last tax to that in from quarter and we the of associated $XX yielded back and look that. --

be changes exactly ruling ‘XX. if the on below in our to there’d be that the And depending IRS’ that, going range reserve upon, effective in be that FY between made. the given XX% we and beyond slightly impact forward, not and to guidance it's, any XX% amount tell we expect to in what indicated rate as our but tax Now early it, we

Operator

Thank you.

with Our next Citi. Jon question is from Raviv

open. is line Your

Jon Raviv

guys you playing two? that three about actually bit those? can just a out Could as changing mobility. might pivot will some the on me that a mentioned, you but can It context of you. you talk in Horacio phase play you place how parties you priority really changes are three? of that change, And budget those seems they secure And in be out the or spaces. areas how those sort where changes? expand of potential these virtual parties to on do, can telehealth, learning, And into in Thank accelerate phase budget

Horacio Rozanski

qualify a I technology saying that are is that, a Telehealth its the environmental to to us that of us that technology that to to securely, The technology handling clear Again that to the needs we have happens a is on the is, to respond poses to around that, drive management technology. to be in going all that not seems this of this being changing. a just want is, if changing how lasting that and do necessity, to continue that midst provided do but situation to requirements infancy, in anything, accelerate the thing to accelerating. effects by the implementation to is become has of how factors and rapidly of is information How the changes is adopted. and broadly everything

will creates middle new that secure On working attack the in, of our And surfaces the home. organization and through technology entire This forefront clients. defend, we're That like opportunities been is right place this hopeful be we've come investing for will very helping is where you mobility, thinking own tremendous everybody efficiency, from know, resiliency. for helpful. effectiveness, a we're our several for years, as and for that which and if for to in

gamified war we clients, from like and as a saw years learn is virtual And be willing technologies over relevant fighters doing learn where things have then We out, again, a significantly is very coming that that. [ID] that was already playing invested one to to in training, were response and would this terms more our in the to that of accelerating, be new reality. generation, to we trend virtual from especially

We pointed this that evolves, just network respond it have quickly that sense out, again, in Lloyd labs because to as to our And one to for that culture, you of there's us to ideas. our on and budget -- we from of rapidly a evolve priorities? quote the to move things timeframe of that in around single P&L, as see is opportunity demand. that. will out, to we've increases all support How I that. hopefully long-term what I to level last. uncertainty invest change we build ability a some created because make We of makes any relates another and as where will within of As us based pointed will But

Jon Raviv

then just encompassed margin XX% you you that if two, FY inefficiencies is appreciate with will, for on that, Thank roughly associated. ‘XX several of the and Yes. phase by you

just point? characterize same impact by how fee the such held or the classify will, how that at you margins In Thank somehow and are of monthly the If XX% guidance inefficiencies you. back, as from impacting context, being could much recovery. mix commercial of if the this is lack you

Lloyd Howell

allocate EBITDA COVID-related upon Sure. point we Jon, allowed Horacio’s see we're improve and resources and QX pleased to really that which despite that let me ‘XX to the but momentum. in the positioning QX, us our maintain through first recognize $XX very impact. the competitive And exceptional in not FY business had that performance million QX, we performance, also only with

it we're And as have we working. perform into And do a operating headwind But in the why to affirming feel is we is temporary on that what well and margins. we've believe -- portfolio that's collect taken business fee XX% security our our to FY strategy expect our ‘XX our our level. contract very guidance. defense businesses. inability at EBITDA still did we account and FY of forward, and ‘XX with We in we're the Going some

Operator

Thank you.

from Our comes next question von Rumohr Cai Cowen. with

open. is line You

Cai von Rumohr

you slowing going prospects continuing more and fiscal on that? relative there color you basically results Thanks. Can forward intel thank what's for and much is what And ‘XX? COVID? some much us and a you in saw impacting Yes, in very again But Is in the decline commercial. defense good civil. give

Horacio Rozanski

I'm morning. will sure I'll good to start want add. -- Lloyd Cai, and

as believe calls still overall while we the inside to with to very accelerate I good. about the are about as to as our that. think all, return of the robust. same that quickly quite trend. is time needed we fact accelerate slightly And for working demand continuation is civil of tune First XX% not extremely We've results you the up which to a expectations some last our the and look business to people to. that faster the it ahead happy the we're adding of talking are couple of that. intel and been was know year on and changes made is what acquisition therefore, And where business a there seeing in the we're growth business at still And of the talent And model. you're that Defense

business called variability inside in business our some that It But U.S. business, was still U.S. for some of the think East we turbulence the Middle business. flat we are the flat business think and year. will optimistic as variability forward. products. it and and probably are commercial our I prospects cyber-centric our the am I I our overall, We in world year. more commercial robustness in And commercial around for excellent. look for Our and for other And spottiness in the especially see

Cai von Rumohr

for much. very you, a quick then you Thank one And Lloyd.

but not Could margin CARES reimburse its what's bps other that $X million some in that's costs with And where basically expected did act for says? on passage, million? Act was what like EBITDA prior actually give My Thanks. we us incurred the per are color afterwards. month, $X year-over-year. contractors close from So for the to on you the is the reimburse the XXX to costs to understanding

Lloyd Howell

our inability Essentially as with Sure. for remarks, invoice prepared CARES to our the said it's really in complying Act and we fee.

clients. said, we're our with conversations being in that constantly Now,

guidance in our 'XX is but account. to a that was to do optimistic the take terms it thought dynamic, certainly this are appropriate We of that we temporary FY best into

future, of will think on unknowns a the this and that that we've As point we range possibility some provided Horacio But one in acknowledges them. those government is pay to the begin invoices. said, we've some at the got

Cai von Rumohr

or it have not? to So assumed entire the year you goes

Lloyd Howell

that As I that feel turn out in said year. the earlier, months, looking be direction. we did part we our other of could there XX the to best it potential to include But the for as

Operator

you. Thank

question next Wells Fargo. comes Edward with Caso Our from

is open. line Your

Edward Caso

or us capture them you And if to seen hope able update wondering you could how to what remind either was capture so again, -- streams? I annuity us morning. you you have Good far? Thanks. sales on through have your optionality been efforts. What

Horacio Rozanski

I'll Sure, start. Ed.

As focused directed things monetize which what District and They based, and distinct But largest of in are one distinct are not initiatives is have Defend so they on a And we efforts; are they that by the our common we're value. you nature inside they that. of behind directly four know, mobility this and the Modzy, differently. marketplace; have our secure and And in number we portfolio plan. and energy at point, is so our are then they of technology. business our platform building four those different recreation.gov; each that that a all labor are each create artificial intelligence

hope First of of much take frankly is all, are we to operation. very plan point, create at profits point, not them. revenues, probably they're good they We this the progress they details add am I the the in time four. they're the all very optimistic more be material and margins the on having each track. all we're this And outside expect at pleased and one create bright. seeing the them hitting to through you future milestones. They're on to to headcount. It’s my value is have overall all both higher that didn't but And than their But of on

Edward Caso

down Presumably be acting impact and cost on some as my fixed a plus with revenue and trend headwind having in and And higher see other a question, margins that's going continuing that do to your forward? you there a drift price drift revenue. seems

Lloyd Howell

We that has business to if materials, the our that. reimbursable times within in percentage a decrement able see in the That get margin a and not increase really that's to from Ed, little site maintained don't grown cost said, bit. performance, or been timing in cost excited that's than have of is execute we due defense preference. vantage reimbursable our time, the largely too The couple and fixed there's contract more a downtick our a clients’ point where not uptick applied. price we being manner in growth point in And if both

up effectively However, we even continue We're operating have our And as margin many as as we're we more scale said. the missteps capabilities in not year-over-year. to we experiencing past. have always higher self-inflicted

for brought so was it down bit. related ‘XX, the impact that a it And COVID really

Horacio Rozanski

I the in together. thesis allow put you’ll the me, it's let to because all If frame the think context important me overall of investment this just

organic. our end new year, you at in of almost meet we we of it remember, -- year over added guidance have the this all the $X we'll three theory If end the billion roughly year, for the would that if revenue, of actually period

Our Lloyd, would an XX% And will looking be low me XXs. XX%. or a XX% at then ADEPS margins the check Xs, in here, gone over have from, the we to year three the growth period low

and future, no And an that, way So Lloyd while continuing continuing different of to inside to to like invest able pointed business margins. business, what's our the of we've the continue in happening even been has parts out, the in while to the all do while for piece to that of drive contract the structure to impediment. drive the

performance pleased actually the with of In we're contracts. the extraordinarily fact,

Operator

Thank you.

with Matt Our next question Barclays. from Akers comes

is line open. Your

Matt Akers

the be more kind Good a could morning, return you timing little I with of able not to the can timing sort access kind that? of of all, we they facilities the secured these to may Has people of guys. some when that to how for these states talk lockdowns about now. question. that should started easing happen Thanks of at if some wonder of of bit or think of

Horacio Rozanski

me So frame let and try it.

brought The and not responsibility, clients our to that been we're continue job because be acted some with people they've frontlines. on stopped we've people the They doing have into telework. there, these our clients. I were on frankly, all, could a to able of First go. and of our work done critical while And that, support keeping of not them, be amazing result be to could of facilities, as an our continuing discipline And everybody have clients, safe. at our diligence. and couldn't of prouder facilities critical great deal of a of be

yet amount for huge beginning go not not in. It's and to forward, are we to it a anticipate see As may be. we more look people and requirements

with clients the about of return things that that our make expect requires addresses plans it, maximize to because works we one client telework it we know facility goal time as consultation do are what do we people in while vast and building it these sure majority back while continue. the And to possible, our clients this. to send all the of in Every safe safe we we Our and of before do. the talked to we is we people telework mission because a for

I responsible think priority. it’s I And way people to and back right meet needs the I need will people-centric is taken, the the of people. go that approach before, we've to mission taken a plan the bring for in safety said the our of that is and that top against way really it have think, clients is executing the again, as this our

Matt Akers

it. And follow-up. a I just guess, then Got Thanks.

near COVID out lot next future? So think of with next as the election we stage long-term about up sort of Obviously that you budget prepared had year for of at in kind point in in talked the about, maybe do that some a the and like of issuing as think when sort pressures, and of uncertainty guidance. you term still framing Or coming you us? remarks. the I of should mean called potentially

Horacio Rozanski

dear say to has is Sure, I'll that's lot our area near topic, start. to on This a I an know and too. this Lloyd hearts.

a probably, if we to strategic the any, both that. associated financials guidance internal give and months, strategic clear that important right ongoing. forward -- guidance XX At review to externally give in changes, time, been with on have go strategic and working clarify next is we will our strategic and both is and internally certainly externally the having think I that the look strategic trying

focused as the we has we successful. been part able very very in thesis strategy. environment done it's plans against for part our of And adaptive and years as have that, again, investment to to to the do, the to as last incorporate, we have still we learn always of be and stay the think, of we three that and our everything we're an have I obviously on on and deliver last backdrop year

Lloyd Howell

fall, calendar, And new the at the getting latest, out not of much our more to then in investment build end upon. hit. I pandemic to thesis or updated was the forward with looking the

we shortly So in position as bit Year, to what the a after of to post the reset the a be do to with election New a update Horacio everyone said, But there. hope back would obviously we to get had be.

Operator

Thank you.

Credit comes Suisse. Spingarn next with from question Robert Our

line open. Your is

Robert Spingarn

Lloyd, cash Well, to wanted you good with start morning. I on the flows.

I So, for fiscal flat thought takes and that with your in guide ask the is two delivered spread? I’d XX. plus 'XX, XXX puts about just around the

Lloyd Howell

this with ability balance payable well offices, out variety increase of unknowns of The happy our ability got now. as very in and guidance, as put half. all the remarks impact do calls, our first pleased consistent in pleased the clarity payment half, that The working very processes we're second we're operational of that might with to the on more are the our you you We prepared to the has listen as as are the these to cash a Well, on Sure. been the collect side. and really as the that in be to place changes, to the virtual our our a journey. largely, improved we’ve around and heard first best what takes in pandemic And that. in unfolds relationship puts

adjustments confident to if everyone make the that expect done place. don’t change. accordingly. we we've and to are But that we'll got in see we've we as doing the past, cyclicality that changes better, we sustainable So in remain We advise

Robert Spingarn

Okay. then quick things. of couple a just Horacio, And

telework. the on First

You've been is post we've one it's What an there's think for seen -- you for to that. think opportunity effective Do increase do this there for And about customer, the that you telework you opportunity And there? talked you. all in how as about specifically, DoD the an customer? crisis?

to wanted ask your was book-to-bill. And on then I the other you question

call trend it the like do years let's first couple a in half? similar fiscal see book-to-bill for something a X.X you of as first -- half, last the a the Here

Horacio Rozanski

the me Let first take part.

it that alongside thank weren't the allowed encouraged And with to our to for want worked if I able clients been all think will us. and we're both Lloyd have move to this have fact level learning. it wouldn't think telework right I and second part. of the We

We do. This write have for very could months proposals example not something we could we told entirely you large is ago, have virtually. learned to these six

And see that too changing limitations in whole I And both learning minds. think clients. efficient would to do the thing often. of accessible of talent more and clients. clients people's see platforms. And our these think different this an have our both people our require about is that be to the make effective opportunity to some are new clients opportunities and I less would would our more delivery, too. remote It -- to move It which more I

try to as look of as so, humanly I And much enable to with and forward that them possible. working

book the the I know Lloyd about front, to want talk On numbers. bill to

all so to optimistic opportunities can say demand continues going I far. on So and pace of writing for accelerated an context proposals robust, I and lot be what's us we're very is do am fortunately with around what performance the a and very in we we of we see again pleased and at the --

Lloyd Howell

correct. really That’s

billion. you work pipeline $X.X me win qualified of and that is the also We're up of the the Let the One a couple increased year-over-year. recompetes is our or indicators point JAIC XX% up that new opportunities give indications about seeing to indicative have optimism. us XX%

but a uptick ‘XX. we're ‘XX year Now lighter in was an that of recompetes expecting FY terms in in

about a largely premature to specific we be pattern I think to numbers, that it's same the talk it's book-to-bill expect say the on curve. but bit safe of seasonal to

Operator

Thank you.

Seifman with Morgan. Our next JP question comes from Seth

open. Your is line

Seth Seifman

we and that about the and about the is there budget on ‘XX Just of that you budget half it are puts specific When whether other remarks really time? in fiscal would are wondering the the risks about what fiscal affect in ‘XX? passed things second call. a there year, think made takes the there's Or early you think your

Horacio Rozanski

of a getting is we about response we feel all is even we going is demonstrate things the and and we Having go the it’s this been market. marketing an deal signals to early the budget environment. aren't how how to part we unprecedented we have things said this that, that potential that number to resilient as at that to I discussions. think the from under very happening changes volatility to believe the sure -- but how mostly COVID demand more two do, quickly it going good our in point I with reality very I want in of year know think as be to the there's are we're acknowledge approach, if mission-centric speak And we We're back point crisis, that the the that we market clients respond that we that budget in this we to signal a go. can for that because as been

And year how we out. so, that's second half playing of see our the

Lloyd Howell

we that see strategic to as sheet I of guidance. FY ‘XX very The would we're one just a several influencing that add a coupled deliver that budget metrics strong asset. of our with across is are all our a balance strong expecting just variables

collaboration supply people, of impact with our and pandemic PTO, the use of clients. our arrangements On the or terms not of side, in shift work use future

are that variables All influence that our of guidance. also

Seth Seifman

high this know I after opportunities. can follow-up. but quick additional going given you’ve one difficult be mentioned classified times of the And at large percentage work,

anything there mentioned You've side, this also can in should out of for? opportunities be so On either we terms call specific you that is watching more recompete year.

Lloyd Howell

a business back rate historical increased got pointed rate to I the recompete we've on basis, Not performance. XX, which to at to win new our getting win this XX%. of X% side, just time. on is And a

workforce, poised with coupled another our that our we our have client So are to solid relationships, differentiation, and year.

Operator

that back Rozanski the Horacio over And closing turn remarks. would for like the to you. question-and-answer I concludes call session. Thank

Horacio Rozanski

all Thank robust this you. morning. questions for And your you thank very and a for discussion

saying you as allow Allen, Allen thing an lean short-term, because today of you'll strive and our thank the me especially excellence. for and Booz can long-term. of can people continue investors analysts. If and the all clients for both for to to of right I'd to the do forward our institution close again And that that can Booz like we It's to to the once you

again, a So thanks have day. and great

Operator

participating. Ladies gentlemen this call. for concludes and today’s Thanks conference

You may now disconnect.

Booz Allen Hamilton Holding (BAH) 26 May 202020 Q4 Earnings call transcript