October 29, 2018
FY19 Bottom Line Guidance Raised After Excellent First Half Performance
Q2 Revenue Increase of 4.6 percent to $1.61 billion, and Revenue, Excluding Billable Expenses1 Growth of 7.2 percent
Diluted Earnings Per Share of $0.64 and Adjusted Diluted Earnings Per Share1 of $0.68
28.1 percent Increase in Total Backlog to $21.4 billion; and Book-to-Bill of 3.66, Each New Records Since IPO
Quarterly Dividend of $0.19 per Share
McLean, Virginia—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 second quarter of fiscal 2019.
In the quarter, the Company continued to execute strongly against its growth strategy in support of three year- financial goals announced in June. The Company reported solid top- and bottom-line growth, record backlog and book-to-bill since the IPO, improved cash flow and strong headcount growth. As a result, the guidance range for full-year Adjusted Diluted Earnings Per Share1 was raised and narrowed to $2.55 - $2.65.
“We are succeeding in the market because clients see the value we bring to their missions through a unique combination of mission knowledge, consulting heritage, innovation, and technology,” said Horacio Rozanski, president and CEO. “On the strength of this differentiation, we have delivered excellent financial results for the first half of the year, and are very pleased to exceed expectations and increase FY19 ADEPS guidance.”
The Company reported second-quarter revenue growth of 4.6 percent, and a 7.2 percent increase in revenue, excluding billable expenses.1 The strong top-line growth contributed to a 10.0 percent increase in Adjusted EBITDA1 to $163.8 million, and Adjusted EBITDA margin on revenue1 was 10.2 percent. Adjusted diluted earnings per share1 for the quarter was $0.68, up $0.18 or 36.0 percent.
Total backlog increased by 28.1 percent over the prior year period to $21.4 billion and the book-to-bill ratio for the second quarter was 3.66x; each represented a record performance since the Company's IPO. As of September 30, 2018, headcount was more than 1,100 higher than the prior year, and increased by more than 780 since the end of the prior quarter.
The Company declared a regular quarterly dividend of $0.19 per share, which is payable on November 30, 2018, to stockholders of record on November 14, 2018.
Second Quarter, ended September 30, 2018 - A summary of Booz Allen’s results for the second quarter of fiscal 2019 is below. All comparisons are to the prior year period, as restated as a result of the adoption of two accounting standards, ASC 606 and ASU 2017-07, that were both effective April 1, 2018. A description of key drivers can be found in the Company’s Earnings Call Presentation for the second quarter posted on investors.boozallen.com.
- Revenue: $1.61 billion, an increase of 4.6 percent.
- Revenue, Excluding Billable Expenses:1 $1.14 billion, an increase of 7.2 percent.
- Operating Income: $143.8 million, an increase of 8.2 percent; and Adjusted Operating Income:1 $147.4 million, an increase of 10.9 percent.
- Net Income: $92.7 million, an increase of 25.9 percent; and Adjusted Net Income:1 $97.4 million, an increase of 31.5 percent.
- EBITDA: $160.2 million, an increase of 7.5 percent; and Adjusted EBITDA:1 $163.8 million, an increase of 10.0 percent.
- Diluted EPS and Adjusted Diluted EPS:1 $0.64 and $0.68, respectively, up from $0.49 and $0.50, respectively.
As of September 30, 2018, total backlog was $21.4 billion, compared to $16.7 billion as of September 30, 2017, an increase of 28.1 percent. Net cash provided by operating activities for the second quarter of fiscal 2019 was $301.6 million as compared to $174.1 million in the prior year period. Free cash flow1 for the second quarter was $282.4 million, compared with $148.6 million in the prior year period.
First Half - Fiscal 2019 - Booz Allen’s cumulative performance for the first and second quarters of fiscal 2019 has resulted in:
- Revenue: $3.26 billion, an increase of 6.4 percent.
- Revenue, Excluding Billable Expenses:1 $2.31 billion, an increase of 8.2 percent.
- Operating Income: $305.4 million, an increase of 17.6 percent; and Adjusted Operating Income:1 $309.0 million, an increase of 19.1 percent.
- Net Income: $196.9 million, an increase of 36.5 percent; and Adjusted Net Income:1 $202.1 million, an increase of 39.3 percent.
- EBITDA: $337.9 million, an increase of 16.1 percent; and Adjusted EBITDA:1 $341.6 million, an increase of 17.4 percent.
- Diluted EPS and Adjusted Diluted EPS:1 $1.36 and $1.40, respectively, up from $0.96 and $0.97, respectively.
1 Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, Adjusted Diluted EPS, Adjusted EBITDA Margin on Revenue and Free Cash Flow are non-GAAP financial measures. See “Non-GAAP Financial Information” below for additional detail.
For our fiscal 2019, we are reaffirming Revenue guidance and updating Adjusted Diluted EPS1 guidance issued on May 29, 2018:
- Revenue: Growth in the 6 to 8 percent range
- Adjusted Diluted EPS: 1 $2.55 - $2.65
This Adjusted Diluted EPS1 estimate is based on fiscal 2019 estimated average diluted shares outstanding in the range of 141 million to 144 million shares, and assumes an effective tax rate in the range of 24 percent to 26 percent, which excludes any ongoing re-measurements of our deferred taxes related to the Tax Cuts and Jobs Act, including benefits we expect to realize in our third quarter of fiscal 2019 from the approval by the Internal Revenue Service of a tax accounting method change.
Conference Call Information
Booz Allen will host a conference call at 8 a.m. EDT on Monday, October 29, 2018, to discuss the financial results for its Second Quarter of Fiscal 2019 (ended September 30, 2018).
Analysts and institutional investors may participate on the call by dialing (877) 375-9141 International: (253) 237-1151, using passcode 9275718. 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 October 29, 2018, and continuing for 30 days.