July 29, 2015
First Quarter Results Reflect Solid Execution on Fiscal Year Plan and Long-Term Strategy
Revenue Increased 2.2 percent, to $1.35 billion
Adjusted EBITDA of $141 million
Adjusted Diluted Earnings per Share of $0.44
Quarterly dividend of $0.13 per share, payable on August 31, 2015
McLean, VA — Booz Allen Hamilton Holding Corporation (NYSE:BAH), the parent company of management and technology consulting and engineering services firm Booz Allen Hamilton Inc., today announced preliminary results for the first quarter of fiscal 2016. The Company made further progress on its long-term growth strategy by continuing to invest in key capabilities and markets, while also increasing spending on bid and proposal activity to capitalize on opportunities in an improving environment.
“Our performance in the first quarter advances a larger narrative: Booz Allen is fully focused on achieving sustainable, quality growth,” said Horacio Rozanski, President and Chief Executive Officer. “We are managing the business today to drive revenue growth and create value for our shareholders, our clients and our people. At the same time, we are investing for the future—in new businesses, capabilities, and talent—so that we have lasting, differentiated, profitable positions in key areas.”
The Company’s revenue increased by 2.2 percent to $1.35 billion over the prior year period, and confidence in the government contracting environment led the Company to increase indirect spending early in fiscal year 2016 to support bid and proposal activity and maintain a bench of available talent. First quarter investment spending on growth platforms also increased year-over-year. Headcount grew notably over the prior year and remained stable since last quarter.
The higher overhead spending during the first quarter is expected to continue in the second quarter but will result in a lower quarterly spending profile for the second half of the year, as well as a more consistent quarterly margin profile than in the last two fiscal years. The Company is executing this strategy as previously communicated, and expects annual margin expansion to continue.
“We are on track to deliver the financial results we have projected for the year,” Rozanski said. “By continuing to closely manage the business and invest in growth areas, we are positioning ourselves very well for the future.”
The Company authorized and declared a regular dividend of $0.13 per share, payable on August 31, 2015, to stockholders of record on August 10, 2015.
First Quarter 2016 – Below is a summary of additional results for the fiscal 2016 first quarter and the key factors driving those results. The results align with the Company’s business plan for FY16, which increases indirect spending during the first half of the fiscal year.
- Gross Revenue increased to $1.35 billion from $1.32 billion primarily as a result of an increase in billable expenses over the prior year period. Revenue on cost reimbursable contracts also benefitted from higher bid and proposal and investment spending.
- Adjusted Operating Income decreased to $127.2 million from $142.1 million in the prior year period. The decrease was primarily the result of pulling forward bid and proposal costs earlier in the year, compared to prior years, to meet a strong demand and higher spending on investments in growth platforms earlier in the year, partially offset by lower depreciation and amortization expense.
- Adjusted Net Income declined to $65.7 million, from $74.6 million in the prior year period. The decline was driven by the same factors that impacted Adjusted Operating Income.
- Adjusted EBITDA decreased to $141.3 million, from $157.3 million and Adjusted EBITDA margins declined to 10.5 percent from 11.9 percent in the prior year period. The decreases were driven by the same factors as Adjusted Operating Income, excluding the effect of the decrease in depreciation and amortization expense.
- Diluted EPS decreased to $0.43 from $0.47 and Adjusted Diluted EPS decreased to $0.44 from $0.50 in the prior year period. The decrease in Adjusted Diluted EPS was driven by the same factors as Adjusted Net Income.
Net cash provided by operating activities in the first quarter was $19.1 million, impacted primarily by the timing of payments and receipts in the quarter, which is expected to reverse during the remainder of the fiscal year. Free Cash Flow was $6.0 million as a result of operating cash, plus an increase in capital expenditures to reconfigure facilities in the Washington D.C. area. Book-to-bill was 0.92 for the first quarter, compared to 0.88 in the prior period.
As of June 30, 2015, funded backlog was $2.39 billion, compared to $2.35 billion as of June 30, 2014. Booz Allen’s total backlog as of June 30, 2015, was $9.26 billion, compared to $9.68 billion as of June 30, 2014. The decline in total backlog was due in part to the shorter duration of awarded contracts, and the timing of contract transitions and extensions, all of which have contributed to a decline in priced options.
For our full fiscal year 2016 we are reaffirming the guidance we issued on May 21, 2015. We expect revenue to be roughly flat, with a range of two percent growth to a two percent decline. At the bottom line, for the full year, we are forecasting diluted EPS to be in the range of $1.55 to $1.65, and Adjusted Diluted EPS to be on the order of $1.60 to $1.70.
These EPS estimates are based on fiscal year 2016 estimated average diluted shares outstanding of approximately 150.4 million shares, and a 40.7 percent effective tax rate, which does not include federal and state tax credits that have not yet been extended or for which qualifications have not yet been established.
Conference Call Information
Booz Allen Hamilton will host a conference call at 8 a.m. EDT on Wednesday, July 29, 2015, to discuss the financial results for its First Quarter Fiscal Year 2016 (ended June 30, 2015).
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 29, 2015, and continuing for 30 days.