Booz Allen Hamilton (BAH) - 2026 Q3 - Quarterly Results

Revenue Performance - Revenue for Q3 fiscal 2026 was $2.6 billion, a 10.2% decrease year-over-year, adjusting to a 6% decrease excluding the impact of the government shutdown[6] - Total revenue for the nine months ended December 31, 2025, was $8.4 billion, a 6.3% decrease year-over-year[7] - Revenue for the three months ended December 31, 2025, was $2,620 million, a decrease of 10.2% compared to $2,917 million for the same period in 2024[29] - Revenue from the Defense sector for the three months ended December 31, 2025, was $1,454 million, slightly up from $1,453 million in 2024[43] Profitability Metrics - Adjusted EBITDA for Q3 was $285 million, representing a 14.2% decrease, with an adjusted EBITDA margin of 10.9%, down 50 basis points from the previous year[6] - Adjusted diluted EPS for Q3 was $1.77, a 14.2% increase compared to the previous year[6] - Net income for Q3 increased by 7.0% to $200 million, while adjusted net income rose by 8.6% to $215 million[6] - Operating income for the nine months ended December 31, 2025, was $770 million, down 29.7% from $1,095 million in 2024[29] - Net income for the nine months ended December 31, 2025, was $646 million, a decrease of 13% compared to $742 million for the same period in 2024[31] - Basic earnings per share for the three months ended December 31, 2025, was $1.64, an increase of 12.3% from $1.46 in 2024[29] Cash Flow and Capital Management - Free cash flow for Q3 was $248 million, compared to $134 million in the prior year, marking an 85.1% increase[7] - Free cash flow for the nine months ended December 31, 2025, was $739 million, compared to $717 million for the same period in 2024[32] - Capital deployment for the quarter amounted to $195 million[6] - The company repurchased 1.1% of outstanding shares during the third quarter[6] - The company repurchased common stock worth $521 million during the nine months ended December 31, 2025[31] Guidance and Future Outlook - The updated fiscal year 2026 revenue guidance is projected to be between $11.3 billion and $11.4 billion, with revenue growth expected to be between -5.0% and -6.0%[8] - The company anticipates future improvements in operating margins and revenue growth, although specific forecasts were not provided[28] Backlog and Demand Indicators - The company reported a record backlog of $38 billion and a quarterly book-to-bill ratio of 0.3x, indicating strengthening demand across Civil and National Security portfolios[6] - Total backlog as of December 31, 2025, was $38,456 million, an increase from $37,879 million in 2024, with funded backlog at $4,206 million[41] - The company reported a book-to-bill ratio of 0.3x for the three months ended December 31, 2025, down from 0.6x in the same period of 2024[42] Balance Sheet Highlights - Total assets as of December 31, 2025, were $7,051 million, down from $7,312 million as of March 31, 2025[30] - Total liabilities as of December 31, 2025, were $6,026 million, a decrease from $6,309 million as of March 31, 2025[30] - Cash and cash equivalents at the end of the period were $882 million, compared to $885 million at the beginning of the period[31] - Net cash provided by operating activities for the nine months ended December 31, 2025, was $801 million, an increase from $790 million in 2024[31] - The company reported total debt of $3,940 million as of December 31, 2025, with a net leverage ratio of 2.5[37] Contract Types and Revenue Composition - Cost-reimbursable contracts accounted for 58% of total revenue for the three months ended December 31, 2025, up from 57% in the same period of 2024[44] - Time-and-materials contracts represented 22% of total revenue for the three months ended December 31, 2025, consistent with the previous year[44] - Fixed-price contracts made up 20% of total revenue for the three months ended December 31, 2025, unchanged from the same period in 2024[44] - For the nine months ended December 31, 2025, cost-reimbursable contracts increased to 59% of total revenue, compared to 57% in the same period of 2024[44] - Time-and-materials contracts remained at 22% of total revenue for the nine months ended December 31, 2025, similar to the previous year[44] - Fixed-price contracts decreased to 19% of total revenue for the nine months ended December 31, 2025, down from 20% in 2024[44] Workforce Changes - Total headcount decreased to 31,600 as of December 31, 2025, from 35,900 in 2024, with customer staff headcount at 29,000[43]