Booz Allen Hamilton (BAH) - 2026 Q1 - Quarterly Results

First Quarter Fiscal 2026 Results Overview First Quarter Fiscal 2026 Highlights The company reported strong Q1 FY26 results in line with expectations, driven by growth in key defense and intel markets Financial Performance Summary | FINANCIAL SUMMARY | | Three Months Ended | | | --- | --- | --- | --- | | | | March 31, | | | | 2025 | 2024 | % Change | | | | (unaudited) | | | Revenue | $2,924 | $2,942 | (0.6)% | | Revenue Ex. Billable Expenses | $2,043 | $1,997 | 2.3% | | Net Income | $271 | $165 | 64.2% | | Diluted EPS | $2.16 | $1.27 | 70.1% | | EBITDA | $297 | $296 | 0.3% | | Adjusted EBITDA | $311 | $302 | 3.0% | | Adjusted EBITDA Margin on Revenue | 10.6% | 10.3% | +30 bps | | Net Cash Provided by Operating Activities | $119 | $52 | 128.8% | | Free Cash Flow | $96 | $20 | 380.0% | | Adjusted Net Income | $184 | $180 | 2.2% | | Adjusted Diluted EPS | $1.48 | $1.38 | 7.2% | - Revenue declined 0.6 percent year-over-year to $2.9 billion[5] - Adjusted Net Income of $184 million, a 2.2 percent increase[5] - Adjusted EBITDA of $311 million, a 3.0 percent increase, with Adjusted EBITDA Margin on Revenue increasing by 30 basis points to 10.6 percent[5] - Adjusted Diluted EPS of $1.48, a 7.2 percent increase[5] - Free cash flow of $96 million, compared to $20 million in the prior year, representing a 380.0% increase[5] Operational Achievements - Record Q1 backlog of $38 billion, a 10.7 percent increase[5] - Quarterly book-to-bill ratio of 1.42x[5] - Repurchase of 1.1 percent of outstanding shares[5] - $200 million anticipated FY26 federal cash tax benefit from new S174 rules[5] - Continued strategic investments to accelerate technology transformation[5] Dividend Declaration - A regular quarterly dividend of $0.55 per share will be payable on August 29, 2025, to stockholders of record on August 14, 2025[3] Fiscal Year 2026 Outlook The company anticipates fiscal year 2026 revenue between $12.0 and $12.5 billion and Adjusted Diluted EPS of $6.20 to $6.55 | OPERATING PERFORMANCE | FISCAL YEAR 2026 GUIDANCE | | --- | --- | | Revenue | $12.0 - $12.5 billion | | Revenue Growth | 0 - 4.0% | | Adjusted EBITDA | $1,315 - $1,370 million | | Adjusted EBITDA Margin on Revenue | ~11% | | Adjusted Diluted EPS3 | $6.20 - $6.55 | | Free Cash Flow4 | $900 - $1,000 million | Company Overview Booz Allen Hamilton is an advanced technology firm serving U.S. defense, civil, and national security priorities with global operations - Booz Allen is an advanced technology company delivering outcomes with speed for America's most critical defense, civil, and national security priorities, building technology solutions using AI, cyber, and other cutting-edge technologies[9] - The firm employs approximately 33,400 people globally as of June 30, 2025[10] - Had revenue of $12.0 billion for the 12 months ended March 31, 2025[10] Earnings Webcast Information The company hosted a conference call on July 25, 2025, to discuss Q1 FY26 results, with a replay available online - A live conference call was hosted at 8 a.m. EDT on Friday, July 25, 2025, to discuss the financial results for the first quarter of fiscal year 2026[7] - The conference call was webcast simultaneously and a replay will be available on investors.boozallen.com[8] Non-GAAP Financial Measures Definitions of Non-GAAP Measures The company utilizes various non-GAAP measures to provide supplemental information for evaluating financial performance and liquidity - Revenue, Excluding Billable Expenses represents revenue less billable expenses, providing useful information about operating performance by excluding the impact of costs like subcontractor and travel expenses[12] - EBITDA represents net income before income taxes, interest expense, net and other income (expense), net, and depreciation and amortization[13] - Adjusted EBITDA represents net income before income tax expense, interest expense, net and other income (expense), net, depreciation and amortization, and certain other items to eliminate the impact of unusual, extraordinary, or non-recurring items[14] - Adjusted Net Income represents net income before other corporate expenses, acquisition amortization, and amortization or write-off of debt issuance costs and debt discount, net of tax effect, to eliminate items not considered indicative of ongoing operating performance[15] - Adjusted Diluted EPS represents diluted EPS calculated using Adjusted Net Income[16] - Free Cash Flow represents the net cash generated from operating activities less the impact of purchases of property, equipment and software[16] - Adjusted Effective Tax Rate represents income tax expense (benefit) excluding the income tax effects of adjustments to net income, divided by adjusted earnings before income tax expense[17] - Net Leverage Ratio is calculated as net debt (total debt less cash) divided by Adjusted EBITDA over the prior twelve months[17] - These non-GAAP financial measures are considered supplemental and not a substitute for financial information prepared in accordance with GAAP[11][18] Reconciliation Exceptions Forward-looking reconciliations for certain non-GAAP measures are excluded due to the inability to predict certain variables without unreasonable effort - A reconciliation of Adjusted Diluted EPS guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the inability to predict stock price, equity grants, and dividend declarations[20] - A reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin on Revenue guidance to the closest corresponding GAAP measure is not available without unreasonable efforts due to the inability to predict specific quantification of the amounts required for reconciliation[21] - Any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors, and the variability of these charges is expected to have an unpredictable and potentially significant impact on future GAAP financial results[20][21] Forward-Looking Statements & Risk Factors Forward-Looking Statements Disclaimer This release contains forward-looking statements about future performance, which are subject to risks and uncertainties - Statements concerning preliminary financial results, financial outlook and guidance, future quarterly dividends, and future improvements in operating margins are considered "forward-looking statements"[22] - Forward-looking statements can be identified by terminology such as "may," "will," "could," "should," "forecasts," "expects," "plans," "anticipates," "projects," "outlook," "believes," "estimates," "predicts," "potential," and "contemplates"[22] - While expectations are believed to be reasonable, there is no assurance they will prove correct, as actual results may differ materially due to known and unknown risks, uncertainties, and other factors[22] - The company undertakes no obligation to update or revise publicly any forward-looking statements, except as required by law[23] Key Risk Factors The company faces risks related to government relationships, spending changes, competition, and internal and economic factors - Risks include any issue compromising relationships with the U.S. government or damaging professional reputation[24] - Changes in U.S. government spending, including reduction efforts, increased insourcing, and shifts in expenditures, as well as government shutdowns and delayed funding[24] - Failure to comply with new and existing U.S. and international laws and regulations[24] - Ability to compete effectively in the competitive bidding process and delays or losses of contract awards[24] - Internal system or service failures and security breaches, including cyber attacks, and misconduct or improper activities from employees, subcontractors, or suppliers[24] - Inherent uncertainties and potential adverse developments in legal or regulatory proceedings, including litigation, audits, reviews, and investigations[24] - Risks related to a possible recession, volatility or instability of the global financial system, deterioration of economic conditions, or weakening in credit or capital markets[24] - Risks related to pending, completed, and future acquisitions and dispositions, and risks related to indebtedness and credit facilities[25] Financial Exhibits Condensed Consolidated Statements of Operations The company reported revenue of $2,924 million and a significant increase in net income to $271 million for the quarter | (Amounts in millions, except per share data) | | Three Months Ended June 30, (unaudited) | | | --- | --- | --- | --- | | | | 2025 | 2024 | | Revenue | | $2,924 | $2,942 | | Operating costs and expenses: | | | | | Cost of revenue | | 1,423 | 1,372 | | Billable expenses | | 881 | 945 | | General and administrative expenses | | 323 | 329 | | Depreciation and amortization | | 40 | 41 | | Total operating costs and expenses | | 2,667 | 2,687 | | Operating income | | 257 | 255 | | Interest expense, net | | (44) | (38) | | Other income (expense), net | | 3 | (3) | | Income before income taxes | | 216 | 214 | | Income tax (benefit) expense | | (25) | 49 | | Net income | | $271 | $165 | | Earnings per common share: | | | | | Basic | | $2.17 | $1.27 | | Diluted | | $2.16 | $1.27 | Condensed Consolidated Balance Sheets Total assets were $7,170 million and total stockholders' equity was $1,065 million as of June 30, 2025 | (Amounts in millions, except share and per share data) | June 30, 2025 (unaudited) | March 31, 2025 | | --- | --- | --- | | Assets | | | | Current assets: | | | | Cash and cash equivalents | $711 | $885 | | Accounts receivable, net | 2,286 | 2,271 | | Prepaid expenses and other current assets | 138 | 157 | | Total current assets | 3,135 | 3,313 | | Property and equipment, net of accumulated depreciation | 171 | 177 | | Operating lease right-of-use assets | 165 | 178 | | Intangible assets, net of accumulated amortization | 549 | 563 | | Goodwill | 2,405 | 2,405 | | Deferred tax assets | 334 | 332 | | Other long-term assets | 411 | 344 | | Total assets | $7,170 | $7,312 | | Liabilities and stockholders' equity | | | | Current liabilities: | | | | Current portion of long-term debt | $83 | $83 | | Accounts payable and other accrued expenses | 949 | 987 | | Accrued compensation and benefits | 656 | 702 | | Operating lease liabilities | 42 | 41 | | Other current liabilities | 30 | 33 | | Total current liabilities | 1,760 | 1,846 | | Long-term debt, net of current portion | 3,896 | 3,915 | | Operating lease liabilities, net of current portion | 164 | 180 | | Other long-term liabilities | 285 | 368 | | Total liabilities | 6,105 | 6,309 | | Stockholders' equity: | | | | Common stock | 2 | 2 | | Treasury stock, at cost | (3,249) | (3,082) | | Additional paid-in capital | 1,071 | 1,042 | | Retained earnings | 3,271 | 3,070 | | Accumulated other comprehensive (loss) income | (30) | (29) | | Total stockholders' equity | 1,065 | 1,003 | | Total liabilities and stockholders' equity | $7,170 | $7,312 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $119 million, while financing activities used $261 million in cash | (Amounts in millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Cash flows from operating activities | | | | Net income | $271 | $165 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | Depreciation and amortization | 40 | 41 | | Noncash lease expense | 12 | 12 | | Stock-based compensation expense | 19 | 20 | | Net (gains) losses on investments, dispositions, and other | (4) | 3 | | Changes in operating assets and liabilities: | | | | Accounts receivable, net | (15) | (217) | | Deferred income taxes and income taxes receivable / payable | 34 | 44 | | Prepaid expenses and other current and long-term assets | (69) | (27) | | Accrued compensation and benefits | (32) | (76) | | Accounts payable and other accrued expenses | (35) | 90 | | Other current and long-term liabilities | (102) | (3) | | Net cash provided by operating activities | 119 | 52 | | Cash flows from investing activities | | | | Purchases of property, equipment, and software | (23) | (32) | | Payments for business acquisitions and dispositions, net of cash acquired | - | (93) | | Payments for cost method investments | (9) | (2) | | Net cash used in investing activities | (32) | (127) | | Cash flows from financing activities | | | | Proceeds from issuance of common stock | 11 | 11 | | Repurchases of common stock | (181) | (116) | | Cash dividends paid | (70) | (66) | | Repayments on revolving credit facility, term loans, and Senior Notes | (21) | (10) | | Net cash used in financing activities | (261) | (181) | | Net decrease in cash and cash equivalents | (174) | (256) | | Cash and cash equivalents-beginning of period | 885 | 554 | | Cash and cash equivalents-end of period | $711 | $298 | Non-GAAP Financial Reconciliations This section provides detailed reconciliations of non-GAAP measures like Adjusted EBITDA and Free Cash Flow to their GAAP equivalents Revenue, Excluding Billable Expenses | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Revenue | $2,924 | $2,942 | | Less: Billable expenses | 881 | 945 | | Revenue, Excluding Billable Expenses | $2,043 | $1,997 | EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Net income | $271 | $165 | | Income tax (benefit) expense | (55) | 49 | | Interest expense, net and other income (expense), net | 41 | 41 | | Depreciation and amortization | 40 | 41 | | EBITDA | $297 | $296 | | Other corporate expenses (a) | 14 | 6 | | Adjusted EBITDA | $311 | $302 | | Net income margin | 9.3 % | 5.6 % | | Adjusted EBITDA Margin on Revenue | 10.6 % | 10.3 % | Adjusted Net Income | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Net income | $271 | $165 | | Other corporate expenses (a) | 14 | 6 | | Acquisition amortization (b) | 12 | 13 | | Amortization or write-off of debt issuance costs and debt discount | - | 1 | | Adjustments for tax effect (c) | (113) | (5) | | Adjusted Net Income | $184 | $180 | Adjusted Diluted Earnings Per Share | | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Weighted-average number of diluted shares outstanding | 124,475,670 | 129,917,263 | | Diluted earnings per share | $2.16 | $1.27 | | Adjusted Net Income Per Diluted Share | $1.48 | $1.38 | Free Cash Flow | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Net cash provided by operating activities | $119 | $52 | | Less: Purchases of property, equipment and software | (23) | (32) | | Free Cash Flow | $96 | $20 | Historical Adjusted EBITDA and Net Leverage Ratio | (In millions) | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | | --- | --- | --- | --- | --- | | Net income | $271 | $193 | $187 | $390 | | Income tax (benefit) expense | (55) | 49 | 61 | 123 | | Interest expense, net and other income (expense), net | 41 | 32 | 43 | 36 | | Depreciation and amortization | 40 | 42 | 40 | 42 | | EBITDA | $297 | $316 | $331 | $591 | | Change in provision for claimed costs (a) | 1 | 1 | 1 | (113) | | Insurance recoveries (b) | - | - | - | (115) | | Other corporate expenses (c) | 14 | - | 1 | 1 | | Adjusted EBITDA | $311 | $316 | $332 | $364 | | Last 12 months Adjusted EBITDA | $1,323 | | | | | Total Debt | $3,979 | | | | | Less: Cash | 711 | | | | | Net Debt | $3,268 | | | | | Net Leverage Ratio (f) | 2.5 | | | | | (In millions) | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | | --- | --- | --- | --- | --- | | Net income | $165 | $128 | $146 | $171 | | Income tax expense | 49 | 91 | 62 | 55 | | Interest expense, net and other income (expense), net | 41 | 45 | 40 | 41 | | Depreciation and amortization | 41 | 40 | 41 | 41 | | EBITDA | $296 | $304 | $289 | $308 | | Change in provision for claimed costs (a) | - | - | - | (18) | | Other corporate expenses (c) | 6 | 2 | 2 | - | | DC tax assessment adjustment (d) | - | (20) | - | - | | Financing transaction costs (e) | - | - | - | 1 | | Adjusted EBITDA | $302 | $286 | $291 | $291 | | Last 12 months Adjusted EBITDA | $1,170 | | | | | Total Debt | $3,403 | | | | | Less: Cash | 298 | | | | | Net Debt | $3,105 | | | | | Net Leverage Ratio (f) | 2.7 | | | | Operating Data Total backlog grew to $38,265 million with a quarterly book-to-bill ratio of 1.42x and a total headcount of 33,400 Backlog | (Amounts in millions) | As of June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Funded | $4,047 | $4,464 | | Unfunded | 10,441 | 9,185 | | Priced options | 23,777 | 20,923 | | Total backlog | $38,265 | $34,572 | Book-to-Bill | | Three Months Ended June 30, | Trailing Twelve Months Ended June 30, | | --- | --- | --- | | | 2025 | 2024 | 2025 | 2024 | | | 1.42x | 1.76x | 1.31x | 1.41x | Headcount | (Amounts are rounded) | As of June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Total Headcount | 33,400 | 35,100 | | Customer Staff Headcount | 30,400 | 32,000 | Revenue by Customer Type | (Amounts in millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Defense | $1,517 | $1,421 | | Intelligence | 484 | 457 | | Civil | 923 | 1,064 | | Total Revenue | $2,924 | $2,942 | Percentage of Total Revenue by Contract Type | | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Cost-Reimbursable | 60% | 56% | | Time-and-Materials | 22% | 23% | | Fixed-Price | 18% | 21% |