Booz Allen Hamilton (BAH) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 11% year-over-year, while revenue excluding billable expenses rose by 10.6% [18] - Adjusted EBITDA for the second quarter was $228 million, up 19% year-over-year, with an adjusted EBITDA margin of 11.3%, the highest since 2015 [20] - Net income and adjusted net income grew 19% and 25% year-over-year to $136 million and $143 million, respectively [21] - Diluted earnings per share increased 23% to $0.98, while adjusted diluted earnings per share rose 27% to $1.03 [21] - Operating cash generated was $426 million, a 97% increase over the prior year, marking the strongest quarterly operating cash result since the IPO [22] Business Line Data and Key Metrics Changes - The defense and civil businesses showed strong growth, while the Intelligence business stabilized despite pandemic challenges [9] - Global Commercial is expected to see a modest decline this fiscal year due to overall economic conditions [9] Market Data and Key Metrics Changes - Total backlog increased by 7% to $24.6 billion, with funded backlog up 2% to $4.5 billion and unfunded backlog growing 15% to $6.2 billion [19] - Book-to-bill ratio for the quarter was 1.8 times, with a first-half book-to-bill of 2.0 times, indicating strong demand [19] Company Strategy and Development Direction - The company is focused on high-value work where emerging technologies meet client needs, with a strategic review expected to be shared next summer [12] - Continued investment in IT and financial infrastructure is planned to support new business lines and growth [13] - The company aims to maximize shareholder value through disciplined capital allocation and strategic partnerships [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate uncertainties related to COVID-19, federal budget, and the election [11] - The company is well-positioned to outperform the market despite potential turbulence in the coming months [11] - Management raised guidance for fiscal year 2021 revenue growth to between 7% and 9% and adjusted EBITDA margin to the low to mid 10% range [25] Other Important Information - The company authorized a quarterly dividend of $0.31 per share, payable on December 2 [24] - The firm repurchased $30 million worth of shares during the quarter [22] Q&A Session Summary Question: What is driving profitability increases? - Management highlighted disciplined execution and operational excellence as key drivers of growth and profitability [28] Question: What are the trends around retention and hiring challenges? - Management noted decreases in attrition and a strong talent pool, particularly in technology [32] Question: How is the company positioned regarding 5G opportunities? - Management sees 5G as an important technology with significant implications for both commercial and government sectors [37][38] Question: How does the company prepare for potential changes in administration? - Management emphasized a focus on enduring issues like cybersecurity and digital transformation, regardless of political changes [69][72] Question: What happened with Q2 bookings being lower than expected? - Management clarified that lower bookings were due to timing issues related to larger awards, not a lack of demand [74]