Booz Allen Hamilton (US:BAH)2025-10-24 13:02Financial Data and Key Metrics Changes - The company reported gross revenue of $2.9 billion, an 8% decline year-over-year, and a 9% decline on a revenue ex-billable basis [25] - Adjusted EBITDA for the quarter was $324 million, down 11% from the prior year, resulting in an adjusted EBITDA margin of 11.2%, which is 40 basis points lower than the same period last year [30] - Net income was $175 million, down 55% year-over-year, with diluted earnings per share decreasing 53% to $1.42 [31] Business Line Data and Key Metrics Changes - The national security portfolio grew by 5% year-over-year, while the civil business revenue declined by 22% year-over-year [25] - The company anticipates civil business revenue to decline in the low 20% range for the full fiscal year [20][25] - Gross bookings totaled $7.2 billion in the quarter, with significant awards in the national security portfolio [26] Market Data and Key Metrics Changes - The funded backlog grew about 34% sequentially to roughly $5 billion but was down 6% year-over-year [27] - The total backlog at the end of the quarter reached $40 billion, up 3% year-over-year [27] - The company noted a bifurcated market environment, with civil agencies facing significant challenges while national security markets showed stronger dynamics [7][12] Company Strategy and Development Direction - The company is focusing on three strategic areas: reducing costs through AI, doubling down on strengths in key growth areas, and leading the transition to outcome-based contracting [14][16] - Investments will be directed towards cyber, AI, warfighting technology, and critical national security programs [16] - The company aims to maintain agility and responsiveness to market changes while preparing for long-term growth [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the current quarter's results and acknowledged that the re-acceleration of business will take longer than expected [5][12] - The procurement environment remains challenging, particularly in the civil sector, with expectations for a delayed return to growth [8][22] - Despite near-term headwinds, management remains optimistic about medium-term growth prospects, particularly in national security [5][12] Other Important Information - The company has approved a quarterly dividend of $0.55 per share, payable on December 2nd [32] - A $500 million increase to the share purchase authorization was also approved, bringing the total available capacity to approximately $880 million [33] Q&A Session Summary Question: Is the funding environment for defense and intel business improving? - Management indicated that while the national security business environment is stronger, there are still frictions due to the government shutdown and procurement delays [42][43] Question: What assumptions are baked into the civilian guidance? - Management stated that they do not anticipate further cuts but expect a competitive procurement environment with pricing pressures [46][47] Question: How does the company view its long-term business model? - Management emphasized the importance of flexibility in responding to market shifts and the ongoing investment in technology partnerships [60][62] Question: How is the backlog coverage and pipeline strength? - Management noted that the current guidance is based on existing trends and that they are actively pursuing new opportunities [76][78] Question: What is the outlook for the cyber business? - Management expressed strong confidence in the growth of the cyber business, highlighting its unique position in the national security space [82]