Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Booz Allen Hamilton Holding Corp | bah093016exhibit991.htm |
| 8-K - 8-K - Booz Allen Hamilton Holding Corp | fy2017q28kearningsrelease.htm |
EARNINGS
CALL
PRESENTATION
Fiscal Year 2017, Second Quarter
NOVEMBER 2, 2016
Innovation Center
Washington D.C.
HORACIO ROZANSKI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LLOYD HOWELL
CHIEF FINANCIAL OFFICER AND TREASURER
CURT RIGGLE
VICE PRESIDENT INVESTOR RELATIONS
1
CALL
PARTICIPANTS
DISCLAIMER
F o rw a rd L o o k in g S a fe H a rb o r S ta tem en t
C er ta in s ta tem en ts co n ta in e d in th i s p res en ta t io n a n d in re la ted comments by our management inc lude “ forward - l ook ing s ta tements” w i th in the mean ing
o f th e P r iv a te S ecu r i t ies L i t i g a t io n Refo rm A ct o f 1 9 9 5 . E x a m p les o f fo rw a rd - l o o k i n g s ta tem en ts in c lu d e in fo rm a t i o n co n cern in g Booz A l len ’ s p re l im ina ry
f in a n c ia l res u l t s , f in a n c i a l o u t lo o k a n d g u id a n ce , in c lu d in g fo reca s te d rev en u e, D i lu ted E P S , a n d A d j u s ted D i lu ted E P S , fu tu r e q u a r ter ly d iv id en d s , a n d
fu tu re im p ro v em en ts in o p era t in g m a rg in s , a s w e l l a s a n y o th er s ta tem en t th a t d o es n o t d i rect ly re la te to a n y h i s to r i ca l o r c u r r en t fa c t . I n s o m e ca s es , yo u
ca n id en t i f y fo rw a rd - l ook ing s ta tements by term ino logy such as “may , ” “w i l l , ” “ cou ld , ” “ shou ld , ” “ forecas ts , ” “expects , ” “ in tend s , ” “p lans , ” “ant i c ipa te s , ”
“pro jects , ” “out look , ” “be l ieve s , ” “es t imates , ” “pred ic ts , ” “potent ia l , ” “ cont inue , ” “pre l im inary , ” or the negat ive o f these ter m s o r o th er co m p a ra b le
term in o log y . A l th ou g h w e b e l ieve th a t th e ex p ecta t io n s re f lec te d in th e forw a rd - l o ok i n g s ta tem en ts a re rea s on a b l e , w e ca n g ive you n o a s s u ra n ce th es e
ex p ecta t i o n s w i l l p ro v e to h a v e b een co rrect .
T h es e fo rw a rd - l o o k i n g s ta tem en ts re la te to fu tu re ev en ts o r o u r fu tu re f in a n c ia l p er fo rm a n c e a n d in v o lv e kn o w n a n d u n kn o w n r i s ks , u n cer ta in t ie s a n d
o th er fa c to rs th a t m a y ca u s e o u r a c tu a l res u l t s , l ev e l s o f a c t iv i ty , p er fo rm a n ce o r a ch iev em e n ts to d i f fer m a ter ia l l y f ro m a n y f u tu re res u l t s , l ev e l s o f
a c t iv i ty , p er fo rm a n ce o r a ch iev em e n ts ex p res s ed o r im p l ied b y th es e fo rw a rd - l o o k i n g s ta tem en ts . A n u m b er o f im p o rta n t fa c to rs co u ld ca u s e a c tu a l res u l t s
to d i f fe r m a ter ia l l y f ro m th o s e co n ta in e d in o r im p l ied b y th es e fo rw a rd - l o o k i n g s ta tem en ts , in c lu d i n g th o s e fa c to rs d i s cu s s ed i n o u r f i l in g s w i th th e
S ecu r i t ies a n d E x ch a n g e C o m m is s io n ( S E C ) , in c lu d i n g o u r A n n u a l Rep o rt o n F o rm 1 0 - K fo r th e f i s ca l yea r en d ed M a rch 3 1 , 2 0 1 6 , w h ich ca n b e fo u n d a t th e
SEC ’ s webs i te a t w w w . s ec . g o v . A l l fo rw a rd - lo o k in g s ta tem en ts a t t r ib u ta b le to u s o r p ers o n s a c t in g o n o u r b eh a l f a re ex p res s ly q u a l i f i ed in th e i r en t i re ty b y
th e fo reg o in g ca u t io n a r y s ta tem en ts . A l l s u ch s ta tem en ts s p ea k o n ly a s o f th e d a te m a d e a n d , ex cep t a s req u i red b y la w , w e u n d e rta ke n o o b l ig a t io n to
u p d a te o r rev i s e p u b l i c ly a n y fo rw a rd - l o o k i n g s ta tem en ts , w h eth er a s a res u l t o f n ew in fo rm a t i o n , fu tu re ev en ts o r o th erw is e .
Note Reg a rd in g Non - GA A P F in a n c ia l Da ta I n form a t io n
Bo o z A l len d i s c lo s es in th e fo l lo w i n g in fo rm a t io n A d j u s ted Op era t in g I n co m e, A d j u s ted E B I T D A , A d j u s ted E B I T D A M a rg in , A d j u s ted N et I n co m e, A d j u s ted
Di lu ted EPS , and F ree Cash F low wh ich a re not recogn ized measurements under GAAP , and when ana lyz i ng Booz A l len ’ s per formance o r l iq u id i t y a s
a p p l i ca b le , in v es to rs s h o u ld ( i ) ev a lu a te ea ch a d j u s tm en t in o u r reco n c i l i a t i o n o f Op era t in g a n d N et I n co m e to A d j u s ted Op era t in g I n co m e, A d j u s ted
E B I T D A , A d j u s ted E B I T D A M a rg in , a n d A d j u s ted N et I n co m e, a n d n et ca s h p ro v id e d b y o p era t in g a c t iv i t i es to f ree ca s h f lo w s , a n d th e ex p la n a t o r y fo o tn o t es
reg a rd in g th o s e a d j u s tm en ts , a n d ( i i ) u s e A d j u s ted E B I T D A , A d j u s ted E B I T D A M a rg in , A d j u s ted N et I n co m e, A d j u s ted Op era t in g I n co m e, a n d A d j u s ted
D i lu ted E P S in a d d i t io n to , a n d n o t a s a n a l tern a t i v e to o p era t in g in co m e, n et in co m e o r D i lu ted E P S a s a m ea s u re o f o p era t in g r es u l t s w i th ca s h f lo w in
a d d i t io n to a n d n o t a s a n a l tern a t iv e to n et ca s h g en era ted f ro m o p era t in g a c t iv i t i es a s a m ea s u re o f l iq u id i ty , ea ch a s d ef i n e d u n d er G A A P . T h e F in a n c ia l
A p p en d ix in c lu d e s a reco n c i l i a t i o n o f A d j u s ted Op era t in g I n co m e, A d j u s ted E B I T D A , A d j u s ted E B I T D A M a rg in , A d j u s ted N et I n co m e, A d j u s ted D i lu ted E P S ,
a n d F ree C a s h F lo w to th e m o s t d i rect ly co m p a ra b le f in a n c ia l m ea s u re ca lcu la t ed a n d p res en ted in a cco rd a n c e w i th G A A P . Bo o z A l l en p res en ts th es e
s u p p lem en t a l p er fo rm a n c e m ea s u res b eca u s e i t b e l iev e s th a t th es e m ea s u res p ro v id e in v es to rs a n d s ecu r i t i es a n a lys ts w i th im p o r t a n t s u p p lem en t a l
in format ion w i th wh ich to eva luate Booz A l len ’ s per formance , long term earn ings potent ia l , o r l iqu id i ty , a s app l i cab le and to e n a b le th em to a s s es s Bo o z
Al len ’ s per formance on the same bas i s a s management . These supp lementa l per formance and l iqu id i ty measurements may vary f rom a n d m a y n o t b e
comparab le to s im i la r ly t i t led measures by other compan ies in Booz A l len ’ s indust ry . W i th respect to our expecta t i on s under “ F i s ca l 2 0 1 7 F u l l Y ea r Ou t lo o k
o n s l id e 5 , reco n c i l i a t io n o f A d j u s ted D i lu ted E P S g u id a n ce to th e c lo s es t co r res p o n d i n g G A A P m ea s u re i s n o t a v a i la b le w i th o u t u n rea s o n a b l e e f fo r ts o n a
fo rw a rd - l o o k i n g b a s i s d u e to o u r in a b i l i t y to p red ic t o u r s to ck p r i ce , eq u i ty g ra n ts a n d d iv id en d d ec la ra t io n s d u r in g th e co u rs e o f f i s ca l 2 0 1 7 . P ro j ect in g
fu tu re s to ck p r i ce , eq u i ty g ra n ts a n d d iv id en d s to b e d ec la red w o u ld b e n eces s a ry to a ccu ra te l y ca lcu la t e th e d i f fer en c e b etw e e n A d j u s ted D i lu ted E P S a n d
G A A P E P S a s a res u l t o f th e e f fects o f th e tw o - c la s s m eth o d a n d re la ted p o s s ib le d i lu t i o n u s ed in th e ca lcu la t i o n o f E P S . C o n s eq u en t l y , a n y a t tem p t to
d i s c lo s e s u ch reco n c i l i a t i o n w o u ld im p ly a d eg ree o f p rec i s io n th a t co u ld b e co n fu s i n g o r m is lea d in g to in v es to rs . W e ex p ect th e v a r ia b i l i t y o f th e a b o v e
ch a rg es to h a v e a n u n p red i c ta b l e , a n d p o ten t ia l l y s ig n i f i c a n t , im p a ct o n o u r fu tu re G A A P f in a n c i a l res u l t s .
2
PIVOT TO ACCELERATING GROWTH
SECOND QUARTER FISCAL YEAR 2017
Our people are capturing opportunities and delivering high -quality work to clients
We are…
• Seeing and capitalizing on healthy demand
• Managing our operations with agility
• Realizing the benefits of our strategic investments in…
–Talent
–Capabilities
–Markets
• Differentiated by the combination of the breadth of our technical capabilities, the
depth of our relationships, our mission knowledge, and our consulting expertise
3
FINANCIAL OVERVIEW
DELIVERING ON OUR FISCAL YEAR 2017 PLAN
• Running our business on an annual basis
• Delivering first half results that align well with our FY17 annual plan
• Remaining agile to take advantage of opportunities as they arise
• Market continues to signal demand
• Clients recognize Booz Allen’s ability to bring solutions to their pressing problems
• Investors can count on us to set a plan and relentlessly execute against it
• We do what we say… year-to-year and over the long run
4
KEY FINANCIAL RESULTS
FISCAL YEAR 2017 PRELIMINARY RESULTS
First half results – including headcount gain and record backlog – position us well for full year
performance and for accelerating growth in FY18 and beyond
• Cash position is also improving as expected
Comparisons are to prior fiscal year period
5
F I R S T H A L F S E C O N D Q U A R T E R
Revenue $2.8 billion 5.4% Increase $1.4 billion 5.5% Increase
Net Income $130.6 million 8.4% Increase $62.8 million 11.8% Increase
Adjusted Net Income $138.5 million 12.3% Increase $69.2 million 20.1% Increase
Adjusted EBITDA $279.5 million 5.3% Increase $135.7 million 9.3% Increase
Diluted EPS $0.86 7.5% Increase $0.41 10.8% Increase
Adjusted Diluted EPS $0.92 10.8% Increase $0.46 18.0% Increase
Total Backlog
$13.6 billion
8.7% Increase
FINANCIAL OUTLOOK
REVISING FULL YEAR GUIDANCE
Raising the bottom end of ranges to reflect first half performance
1) Full Fiscal Year 2017 Estimated Weighted Average Diluted Share Count of 150 million shares; assumes an effective tax rate of 39.3%
6
F I S C A L 2 0 1 7 F U L L Y E A R O U T L O O K
Revenue
Growth in the Range of
Three to Five Percent
Diluted EPS (1): $1.63 - $1.70
Adjusted Diluted EPS (1): $1.68 - $1.75
APPENDIX
NON-GAAP FINANCIAL INFORMATION
• "Adjusted Operating Income" represents operating income before: (i) adjustments related to the amortization of
intangible assets, and (ii) transaction costs, fees, losses, and expenses, including fees associated with debt
prepayments. We prepare Adjusted Operating Income to eliminate the impact of items we do not consider
indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring
nature or because they result from an event of a similar nature.
• "Adjusted EBITDA” represents net income before income taxes, net interest and other expense and depreciation
and amortization and before certain other items, including transaction costs, fees, losses, and expenses,
including fees associated with debt prepayments. “Adjusted EBITDA Margin” is calculated as Adjusted EBITDA
divided by revenue. Booz Allen prepares Adjusted EBITDA and Adjusted EBITDA Margin to eliminate the impact
of items it does not consider indicative of ongoing operating performance due to their inherent unusual,
extraordinary or non-recurring nature or because they result from an event of a similar nature.
• "Adjusted Net Income" represents net income before: (i) adjustments related to the amortization of intangible
assets, (ii) transaction costs, fees, losses, and expenses, including fees associated with debt prepayments, and (iii)
amortization or write-off of debt issuance costs and write-off of original issue discount, net of the tax effect
where appropriate calculated using an assumed effective tax rate. We prepare Adjusted Net Income to eliminate
the impact of items, net of tax, we do not consider indicative of ongoing operating performance due to their
inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar
nature.
• "Adjusted Diluted EPS" represents diluted EPS calculated using Adjusted Net Income as opposed to net income.
Additionally, Adjusted Diluted EPS does not contemplate any adjustments to net income as required under the
two-class method as disclosed in the footnotes to the financial statements.
• "Free Cash Flow" represents the net cash generated from operating activities less the impact of purchases of
property and equipment.
8
NON-GAAP FINANCIAL INFORMATION
9
Fiscal 2017 Full Year Outlook
(a) Reflects amortization of intangible assets resulting from the
Acquisition of our Company by The Carlyle Group.
(b) Reflects debt refinancing costs incurred in connection with
the refinancing transaction consummated on July 13, 2016.
(c) Reflects tax effect of adjustments at an assumed marginal tax
rate of 40%.
(d) Excludes an adjustment of approximately $0.7 million and
$1.3 million of net earnings for the three and six months ended
September 30, 2016, respectively, and excludes an adjustment
of approximately $0.8 million and $1.6 million of net earnings
for the three and six months ended September 30, 2015,
respectively, associated with the application of the two-class
method for computing diluted earnings per share.
(Amounts in thousands, except share and per share data) 2016 2015 2016 2015
Adjusted Operating Income
Operating Income 117,661$ 108,816$ 246,962$ 234,960$
Amortization of intangible assets (a) 987 1,056 2,113 2,112
Transaction expenses (b) 3,354 — 3,354 —
Adjusted Operating Income 122,002$ 109,872$ 252,429$ 237,072$
EBITDA, Adjusted EBITDA & Adjusted EBITDA Margin
Net income 62,830$ 56,216$ 130,647$ 120,522$
Income tax expense 34,917 34,737 80,464 79,017
Interest and other, net 19,914 17,863 35,851 35,421
Depreciation and amortization 14,677 15,352 29,178 30,469
EBITDA 132,338 124,168 276,140 265,429
Transaction expenses (b) 3,354 — 3,354 —
Adjusted EBITDA 135,692$ 124,168$ 279,494$ 265,429$
Revenue 1,394,853 1,322,154 2,817,575 2,673,758
Adjusted EBITDA Margin 9.7 % 9.4 % 9.9 % 9.9 %
Adjusted Net Income
Net income 62,830$ 56,216$ 130,647$ 120,522$
Amortization of intangible assets (a) 987 1,056 2,113 2,112
Transaction expenses (b) 3,354 — 3,354 —
Amortization or write-off of debt issuance costs and write-off of
original issue discount 6,278 1,309 7,567 2,603
Adjustments for tax effect (c) (4,248) (946) (5,214) (1,886)
Adjusted Net Income 69,201$ 57,635$ 138,467$ 123,351$
Adjusted Diluted Earnings Per Share
Weighted-average number of diluted shares outstanding 150,200,454 149,388,556 149,914,416 148,996,669
Adjusted Net Income Per Diluted Share (d) 0.46$ 0.39$ 0.92$ 0.83$
Free Cash Flow
Net cash provided by operating activities 205,436$ 69,591$ 217,083$ 88,687$
Less: Purchases of property and equipment (8,972) (16,422) (15,143) (29,562)
Free Cash Flow 196,464$ 53,169$ 201,940$ 59,125$
(Unaudited) (Unaudited)
Three Months Ended
September 30,
Six Months Ended
September 30,