July 30, 2014
Procurement Climate Improving, with Increased Proposal Activity
First Quarter revenue of $1.32 billion
Adjusted EBITDA of $157 million
Adjusted Diluted Earnings per Share of $0.50
$1.00 Special dividend and $0.11 quarterly dividend declared – both payable on August 29, 2014
McLean, VA — Booz Allen Hamilton Holding Corporation (NYSE:BAH), the parent company of management and technology consulting firm Booz Allen Hamilton, Inc., today announced preliminary results for the first quarter of fiscal 2015. The Company saw revenue declines for the quarter, primarily as a result of a decline in headcount driven by continued spending caution by federal government clients. Booz Allen’s fiscal year runs from April 1 to March 31, with the first quarter of fiscal 2015 ending June 30, 2014.
Revenue for the first quarter was $1.32 billion, compared with $1.43 billion in the prior year period, a decrease of 7.4 percent. Adjusted EBITDA was $157.3 million in the first quarter of fiscal 2015, compared to $158.1 million in the prior year period, a slight decrease of 0.5 percent. Adjusted Net Income was $74.6 million, compared to $73.2 million in the prior year period, an increase of 1.8 percent. Adjusted Diluted Earnings per Share was $0.50 for the first quarter, consistent with $0.50 for the prior year quarter.
The Company authorized and declared a special dividend of $1.00 per share and a regular quarterly cash dividend of $0.11 per share, payable on August 29, 2014, to stockholders of record on August 11, 2014.
Ralph W. Shrader, Booz Allen’s Chairman & Chief Executive Officer, said, “All in all, we are pleased with our position at the end of the fiscal 2015 first quarter – while our revenue decrease during the quarter was due to a climate of continued cautionary spending by the federal government, our staff productivity remains high and profitability on contracts and task orders remain strong. The procurement climate has been improving and we are seeing a continuation in the high level of proposal activity that began in April with a pickup in contract awards, as reflected in a seasonally strong book-to-bill and an increase in funded backlog. We are also seeing promising signals for contract awards in our fiscal 2015 second quarter which coincides with the end of the government’s fiscal year.
“Looking further ahead, we continue to invest in areas consistent with our long-term growth strategy – in innovation, engineering and systems delivery, advanced analytics, and cyber – and have brought to market several new products and service offerings that are gaining traction. Growth in our commercial and international markets is accelerating, and we have the opportunity to invest in a significant expansion in selected countries in the Middle East, adding senior leadership and staff capacity in that region in anticipation of further opportunities there,” Shrader said.
First Quarter 2015 – Below is a summary of Booz Allen’s results for the fiscal 2015 first quarter and the key factors driving those results:
- Booz Allen’s 7.4 percent decline in revenue in the first quarter of fiscal 2015 compared with the prior year period resulted from demand-related reductions in headcount, which resulted in fewer billable hours in total. The revenue decline was additionally the result of a decline in lower margin billable expenses.
- In the first quarter of fiscal 2015, Operating Income increased to $139.0 million from $138.7 million in the prior year period, and Adjusted Operating Income increased to $142.1 million from $141.9 million in the prior year period. The increases were attributable to continued effective cost management and profitability. The impact of revenue declines on Operating Income and Adjusted Operating Income were mitigated by a decline in certain provisions for the potential recovery of allowable expenses, and to a lesser extent from reductions in fringe benefit costs, incentive compensation, and depreciation expense recorded during the first quarter of fiscal 2015 as compared to the prior year period. Adjusted EBITDA decreased to $157.3 million from $158.1 million in the prior year period and was impacted by the same factors as Adjusted Operating Income, excluding the positive impact of the decline in depreciation expenditures.
- In the first quarter of fiscal 2015, Net Income increased to $71.1 million from $70.3 million in the prior year period. Adjusted Net Income increased to $74.6 million from $73.2 million in the prior year period. These increases in earnings compared to the prior year period were largely the result of the factors affecting Operating Income and Adjusted Operating Income.
- In the first quarter of fiscal 2015, diluted EPS decreased to $0.47 from $0.48 in the prior year period; Adjusted Diluted EPS remained consistent at $0.50 per share as compared to $0.50 in the prior year period. The per share earnings results were driven by the same factors as Net Income and Adjusted Net Income, offset by an increase in diluted share count.
Free cash flow for the first quarter was $89.1 million, compared with $71.4 million in the prior year period. The increase was primarily the result of a timing-related decrease in cash tax payments as compared to the prior year period.
Funded backlog as of June 30, 2014, was $2.35 billion, compared with $2.19 billion as of June 30, 2013, an increase of 7.1 percent. Booz Allen’s total backlog, as of June 30, 2014, was $9.68 billion, compared with $10.86 billion as of June 30, 2013. We believe the quarter’s increase in funded backlog reflects a more normalized flow of award activity as the federal government approaches the end of its fiscal year, as reflected in a book-to-bill of 0.88 for the quarter, which was stronger than the 0.52 book-to-bill for our first quarter of fiscal 2014.
For our full fiscal year 2015 we are reaffirming the guidance we issued on May 21, 2014, which calls for a mid-single digit percentage decline in revenue, and diluted EPS to be in the range of $1.44 to $1.54, with Adjusted Diluted EPS to be on the order of $1.50 to $1.60 per share.
These EPS estimates are based on fiscal year 2015 estimated average diluted shares outstanding of approximately 151.3 million shares, and a 40.5 percent effective tax rate, which does not include federal and state tax credits that have not yet been extended or for which qualification has not yet been established.
Conference Call Information
Booz Allen Hamilton will host a conference call at 8 a.m. EDT on Wednesday, July 30, 2014, to discuss the financial results for its First Quarter of Fiscal Year 2015 (ending June 30, 2014).
Analysts and institutional investors may participate on the call by dialing (877) 375-9141 International: (253) 237-1151. The conference call will be webcast simultaneously to the public through a link on the investor relations section of the Booz Allen Hamilton web site at investors.boozallen.com. A replay of the conference call will be available online at investors.boozallen.com beginning at 11 a.m. EDT on July 30, 2014, and continuing for 30 days.