Financial Data and Key Metrics Changes - Gross revenue for the first quarter decreased by approximately 1% year over year to $2.9 billion, while revenue excluding billable expenses grew by 2% year over year [26] - Adjusted EBITDA for the first quarter was $311 million, up 3% from the prior year, resulting in an adjusted EBITDA margin of 10.6%, an increase of 30 basis points year over year [30] - Net income for the first quarter was $271 million, a year-over-year increase of 64%, primarily due to a favorable agreement with the IRS [31] - Diluted earnings per share grew 70% year over year to $2.16, while adjusted diluted earnings per share increased 7% year over year to $1.48 [32] Business Line Data and Key Metrics Changes - Revenue in the Defense sector increased by 7% year over year, while revenue in the Intelligence sector rose by 6% compared to the prior year [26] - Civil business revenue decreased by 13% year over year, reflecting the challenges faced in that segment [26] Market Data and Key Metrics Changes - The total backlog reached an all-time Q1 record of $38 billion, up 11% year over year, with a book-to-bill ratio of 1.42 times for the quarter [28] - The proposal pipeline at the end of the first quarter was nearly $43 billion, which is 3% higher than the same point in fiscal year 2024 [28] Company Strategy and Development Direction - The company is focusing on a strategy termed "Vault," which emphasizes velocity, leadership, and technology, aiming to leverage technology investments to drive mission effectiveness [9] - The company is restructuring its civil business to align with current demand and is focusing on modernization opportunities, such as a $51 million task order with Customs and Border Protection [12] - The company is also advancing partnerships across the technology ecosystem to maintain global technological supremacy [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while the procurement environment is improving, it is still operating below historical speeds, and they expect to see a return to growth in the second half of the fiscal year [8][21] - The management expressed optimism about the medium to long-term outlook, particularly in technology investments related to AI, cyber, and quantum [9][21] Other Important Information - The company repurchased just over 1% of its outstanding shares during the quarter and increased its commitment to Booz Allen Ventures by $200 million [24][34] - The company expects free cash flow for the fiscal year to be between $900 million and $1 billion, reflecting anticipated federal tax impacts [35] Q&A Session Summary Question: Is there a greater appreciation for Booz Allen's technology in the current procurement environment? - Management acknowledged that the business has stabilized and that their technology is recognized for its effectiveness in mission-critical conditions, leading to optimism about future opportunities [44][45] Question: What is the interest from Silicon Valley tech providers to partner with Booz Allen? - Management confirmed that partnerships with commercial tech companies are a significant part of their strategy, and they are seen as a valuable partner by these companies [48] Question: Can you comment on funded backlog trends? - Management indicated that while they are winning work, the funding environment is slow, leading to a relative decline in funded backlog [56] Question: What are the challenges in hiring talent? - Management stated that they are comfortable with their hiring pace and are effectively matching supply and demand, with no significant challenges in attracting talent [63][64] Question: How does the current administration's focus on transformational contracts affect Booz Allen? - Management believes that the current administration's focus on new priorities presents both challenges and opportunities, and they are well-positioned to adapt [101][102]
Booz Allen Hamilton (BAH) - 2026 Q1 - Earnings Call Transcript