Booz Allen Hamilton Holding Corporation (NYSE:BAH) Q3 2024 Earnings Call Transcript

Booz Allen Hamilton Holding Corporation (NYSE:BAH) Q3 2024 Earnings Call Transcript January 26, 2024

Booz Allen Hamilton Holding Corporation misses on earnings expectations. Reported EPS is $ EPS, expectations were $1.13. BAH isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning and thank you for standing by, and welcome to Booz Allen Hamilton’s Earnings Call covering Third Quarter Fiscal Year 2024 Results. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for questions. I’d now like to turn the call over to Mr. Nathan Rutledge.

Nathan Rutledge: Thank you. Good morning, and thank you for joining us for Booz Allen’s third quarter fiscal year 2024 earnings call. We hope you had an opportunity to read the press release we issued earlier this morning. We have also provided presentation slides on our website and are now on slide two. With me today to talk about our business and financial results are Horacio Rozanski, our President and Chief Executive Officer; and Matt Calderone, Executive Vice President and Chief Financial Officer. As shown in this disclaimer on slide three, please keep in mind that some of the items we will discuss this morning are forward-looking and may relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from forecasted results discussed in our SEC filings and on this call.

All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements and speak only as of the date made. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. During today’s call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third quarter fiscal year 2024 earnings release and slides. It is now my pleasure to turn the call over to our CEO and President, Horacio Rozanski.

We are now on slide four.

Horacio Rozanski: Thank you, Nathan, and good morning, everyone. Thank you for joining us. Matt and I are very excited to share excellent financial results with you today. Booz Allen’s record-breaking fiscal year continues. Our best first half has now extended into our strongest three quarters of growth since our firm went public in 2010. I am so proud of our team. Thanks to their efforts, we have achieved the strategic and operational momentum we aim for under our VoLT strategy. Our financial performance has been remarkably consistent. This quarter, we continue to deliver industry-leading double-digit organic revenue growth. We remain ahead of pace on our multi-year investment thesis and again, expect to exceed our guidance for the fiscal year.

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Q&A Session

Given the continuing uncertainty in the market, from ongoing budget debates, geopolitical conflicts and the upcoming election, our clear focus remains to accelerate momentum and increase resiliency across our institution. Matt will take you through the full details of the quarter and our outlook for the rest of the fiscal year. For the remainder of my remarks, I will focus on putting our continued success in the context of our VoLT strategy. Let me begin with a little historical context. 2024 is Booz Allen’s 110th year. Since our earliest days, we have embraced continual transformation as an imperative for relevance in the market and long-term growth. From World War II to the Apollo missions to the advent of digital government, Booz Allen anticipated the next waves of change early and transformed to meet the needs of each moment.

Our goal has always been to stay a step ahead of our clients’ requirements and help them drive their own transformations. Our firm has outperformed the market for decades because of four primary differentiators. Our ability to anticipate and adapt. Our capacity to invest and innovate. Our position on critical national missions. And most important, most important, our exceptional talent. All these factors hold true today. The current iteration of our century-long transformation journey is called VoLT, which stands for Velocity, Leadership, and Technology. We have been implementing this program for the past 24 months. The strategic aims of VoLT are to get faster and elevate our client impact, which in turn accelerate our growth and drive exceptional shareholder value.

Our third quarter results demonstrate a few important things about our strategic progress. First, we have built resilience and driven momentum into the business, even as the external environment remains dynamic and uncertain. Second, we have strengthened our leadership position in the market as we transform missions of national importance with emerging technologies. And third, we have gained speed and efficiency in how we operate and grow our workforce. In sum, our VoLT strategy is working. As examples, let’s look at two key missions we are transforming and at the amazing people who do this work. First, China. The National Defense Strategy describes China as DoD’s pacing challenge, and it outlines the top priorities to strengthen the U.S. deterrence mission.

The sheer geographic scale of this mission, which encompasses nearly half of the Earth’s surface, creates both urgency and unique complexity for our clients. Through years of investment in the right technologies, talent, and partnerships, we are more prepared than ever to help our clients translate urgency into speed at scale. Today, we have more than 600 employees in the Indo-Pacific region working across various aspects of this mission. We have also forward deployed our innovation ecosystem. This provides our clients with faster, more direct access to emerging technologies. Our client focus is on accelerated readiness, supporting allies and partners, and bringing AI and cyber to key mission priorities. While there is much work to do, we are already having impact.

A relevant public example is our recent win of a small, but strategic contract to build a private 5G network for the United States Navy in Guam. This work will leverage our early investments and expertise in 5G, edge computing, and zero trust to support secure communications, operations, and logistics on the island. Finally, I’ll note that our firm’s focus on the pacing challenge is not limited to our growing presence in the Indo-Pacific. Leveraging our lessons from Ukraine and other conflicts, we are considering how to tailor our solutions across all of our sectors. And given the scale and complexity of the China mission, we are also engaging our network of technology partners to mount an all-of-nation approach. In short, we are deeply committed to helping our clients defend U.S. interests.

Because this is a long-term priority for our nation, it will be a long-term priority for Booz Allen. Pivoting next to our health business. For more than a decade, Booz Allen has been at the heart of many federal healthcare transformations. For example, we have worked to modernize care and benefits delivery for our veterans, implement health reform, and accelerate how life-saving drugs are safely brought to market. Through the strength of our work across these and many other missions, the health portfolio has crossed the $2 billion annual revenue threshold. Today, building on that success, we are poised to help our country transform the future of public health. Our recent win of the Data Modernization Accelerator contract, or DMAC, at the Centers for Disease Control, is a tremendous opportunity to improve data interoperability across the public health ecosystem.

Our years of innovating at the VA and our early investments in cloud, machine learning, generative AI, and cyber positioned us well to win this work. Now Booz Allen is playing an integral role in helping the CDC unlock the power of data at scale, so our country can better prepare for and respond to critical public health emergencies. I’ve just described a small sample of the work we do at the center of the missions that matter most. More broadly, we are leading the way in redefining intelligence collection, implementing zero trust, and preparing for a post-quantum world. We are also focused on accelerating U.S. space superiority by harnessing data to speed decision-making and mission outcomes. To that end, we recently made a venture investment in a company called Albedo to leverage their leading-edge imagery capabilities as new data collection sources for our clients.

The strategic importance of all these missions, coupled with our outstanding execution, build resilience in our business, and our relentless implementation of VoLT drives our momentum. Today, we are exactly where we want to be as we live our purpose to empower people to change the world. Because more than anything, at our core, we are a company of purpose-driven professionals. People join Booz Allen because they have a passion for doing world-changing work. People stay at Booz Allen because we invest in them and provide unique opportunities to solve tough challenges inside essential missions. Simply put, our people catalyze the potential of Booz Allen. So, my final point in our success with VoLT connects to our record headcount growth over the past six quarters.