Booz Allen Hamilton (BAH) - 2025 Q1 - Quarterly Report

PART I. Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2024, covering balance sheets, income, cash flows, and detailed accounting notes Condensed Consolidated Financial Statements This section provides a snapshot of the company's financial position and performance, highlighting key metrics like total assets, revenue, net income, and operating cash flow Condensed Consolidated Statements of Operations Highlights (Three Months Ended June 30, in thousands) | Financial Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,941,797 | $2,654,486 | +10.8% | | Operating Income | $255,164 | $234,418 | +8.9% | | Net Income | $165,233 | $161,388 | +2.4% | | Diluted EPS | $1.27 | $1.22 | +4.1% | Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $297,664 | $554,257 | | Total Assets | $6,640,787 | $6,563,688 | | Long-term debt, net | $3,330,351 | $3,349,941 | | Total Liabilities | $5,556,846 | $5,517,126 | | Total Stockholders' Equity | $1,083,941 | $1,046,562 | Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended June 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $52,128 | $(71,532) | | Net cash used in investing activities | $(127,327) | $(15,054) | | Net cash used in financing activities | $(181,394) | $(108,636) | | Net decrease in cash and cash equivalents | $(256,593) | $(195,222) | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial results, covering business overview, revenue recognition, acquisitions, debt, and compensation - The company provides diverse consulting and technology services to governments and corporations, employing approximately 35,100 individuals as of June 30, 2024[24] - The acquisition of PAR Government Systems Corporation on June 7, 2024, for approximately $94.8 million, resulted in $50.3 million in goodwill and $33.7 million in recognized intangible assets[48] - The effective income tax rate increased to 22.9% for the three months ended June 30, 2024, from 19.7% in the prior year, primarily due to permanent tax items and share-based compensation benefits[67] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the first quarter of fiscal 2025, highlighting revenue growth, operational trends, contract backlog, liquidity, and non-GAAP measures Financial and Other Highlights The company achieved strong growth in Q1 FY2025, with revenue increasing by 10.8% and operating income rising by 8.9%, despite a slight decrease in operating margin Q1 FY2025 Key Financial Metrics (Three Months Ended June 30, in millions) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,941.8 M | $2,654.5 M | +10.8% | | Operating Income | $255.2 M | $234.4 M | +8.9% | | Operating Margin | 8.7% | 8.8% | -0.1 ppt | Non-GAAP Measures The company uses non-GAAP measures like Adjusted Operating Income, Adjusted EBITDA, and Adjusted Diluted EPS to provide insight into core operating performance by excluding non-operational items Reconciliation of GAAP to Non-GAAP Measures (Three Months Ended June 30, in thousands, except per share) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net Income (GAAP) | $165,233 | $161,388 | | Adjusted Net Income (Non-GAAP) | $179,611 | $193,057 | | Diluted EPS (GAAP) | $1.27 | $1.22 | | Adjusted Diluted EPS (Non-GAAP) | $1.38 | $1.47 | | Adjusted EBITDA (Non-GAAP) | $301,963 | $306,986 | | Adjusted EBITDA Margin on Revenue | 10.3% | 11.6% | Contract Backlog Total contract backlog increased by 15.7% to $36.2 billion as of June 30, 2024, reflecting strong demand and new contract awards across all components Contract Backlog Comparison (in millions) | Backlog Component | June 30, 2024 | June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Funded | $5,136 | $4,903 | +4.8% | | Unfunded | $10,119 | $9,045 | +11.9% | | Priced Options | $20,923 | $17,329 | +20.7% | | Total Backlog | $36,178 | $31,277 | +15.7% | - Remaining performance obligations increased to $9.6 billion as of June 30, 2024, from $8.7 billion as of March 31, 2024, reflecting unperformed work on exercised contracts[117] Results of Operations Revenue grew 10.8% driven by increased headcount and demand, while various expenses, including billable expenses and interest, also increased during the quarter - Revenue increased by 10.8% due to strong demand for services and solutions, alongside an approximate 2,500 year-over-year increase in total headcount[125] - Billable expenses rose by 16.3%, reaching 32.1% of revenue, primarily driven by increased subcontractor utilization to meet client demand[127] - Interest expense increased by 29.5% to $45.9 million, largely attributable to additional bond interest from the $650.0 million Senior Notes issued in fiscal 2024[128] Liquidity and Capital Resources As of June 30, 2024, the company maintained strong liquidity, with net cash from operations of $52.1 million, and continued to return value to shareholders through dividends and share repurchases Cash Flow Summary (Three Months Ended June 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $52,128 | $(71,532) | | Net cash used in investing activities | $(127,327) | $(15,054) | | Net cash used in financing activities | $(181,394) | $(108,636) | - The company paid a quarterly cash dividend of $0.51 per share, totaling $66.4 million, during the first quarter of fiscal 2025[136] - The company repurchased 0.5 million shares for $78.3 million in Q1 FY2025, with approximately $929.9 million remaining under the share repurchase program as of June 30, 2024[136] Quantitative and Qualitative Disclosures About Market Risk The company reports that there have been no material changes to the information regarding market risk disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2024 - No material changes occurred in the company's market risk disclosures during the quarter ended June 30, 2024[152] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2024, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[153] - No material changes in internal control over financial reporting occurred during the last fiscal quarter[154] PART II. Other Information Legal Proceedings This section details the status of legal proceedings, including routine government audits and the voluntary dismissal of two shareholder lawsuits in April and May 2024 - The company is subject to continuous audit, review, and investigation by the U.S. government in the ordinary course of business[156] - The plaintiffs' appeal in the Langley v. Booz Allen Hamilton case was voluntarily dismissed with prejudice on April 23, 2024[156] - The Thum v. Rozanski et al. shareholder derivative case was voluntarily dismissed without prejudice by court order on May 20, 2024[156] Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2024 - No material changes occurred to the risk factors disclosed in the company's most recent Annual Report on Form 10-K[157] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's repurchases of its equity securities, including the 522,617 shares repurchased during the quarter ended June 30, 2024, and the recent increase in the share repurchase program Issuer Purchases of Equity Securities (Quarter Ended June 30, 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 170,742 | $146.11 | | May 2024 | 165,502 | $151.03 | | June 2024 | 186,373 | $151.91 | | Total | 522,617 | N/A | - The Board of Directors increased the share repurchase program by $525.0 million to a total of $3,085.0 million on May 22, 2024[160] Other Information This section discloses the adoption of Rule 10b5-1 trading arrangements by company officers, specifically CFO Matthew A. Calderone and CLO Nancy J. Laben, during the quarter - CFO Matthew A. Calderone adopted a new Rule 10b5-1 trading arrangement for up to 7,930 shares of common stock on June 5, 2024, terminating on June 6, 2025[162] - CLO Nancy J. Laben adopted a new Rule 10b5-1 trading arrangement for up to 11,984 shares of common stock on May 30, 2024, terminating on May 30, 2025[162] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits include CEO and CFO certifications as required by the Sarbanes-Oxley Act (Sections 302 and 906)[164] - The report incorporates financial statements and notes formatted in Inline XBRL as Exhibit 101[164]