Attached files
file | filename |
---|---|
EX-99.1 - EXHIBIT 99.1 - Booz Allen Hamilton Holding Corp | bah123116exhibit991.htm |
8-K - 8-K - Booz Allen Hamilton Holding Corp | fy2017q38kearningsrelease.htm |
EARNINGS CALL
PRESENTATION
Fiscal Year 2017, Third Quarter
JANUARY 30, 2017
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
Fo rward Look ing Sa fe Harbor S ta tement
Ce r t a i n s t a tement s con ta ined i n t h i s presen ta t i on and i n re l a t ed comment s by our management i n c l ude “ fo rward ‐ l ook ing s t a tement s ” wi th in t he mean ing
o f t he Pr i va te Secu r i t i e s L i t i g a t i on Re fo rm Ac t o f 1995 . Examp le s o f f o rward ‐ l ook ing s t a tement s i n c l ude i n fo rmat i on conce rn ing Booz A l l en ’ s pre l im ina ry
f i nanc i a l r e su l t s , f i nanc i a l out look and gu idance , i n c l ud ing f o reca s ted revenue , D i l u ted EPS , and Ad ju s ted D i l u ted EPS , f u tu re qua r te r l y d i v i dends , and
f u tu re improvement s i n opera t i ng marg in s , as we l l as any othe r s t a tement t ha t does not d i re c t l y re l a t e t o any h i s to r i c a l or cu r ren t f a c t . I n some ca se s , you
can i den t i f y f o rward ‐ l ook ing s t a tement s by t e rm ino logy such as “may , ” “w i l l , ” “ cou ld , ” “ shou ld , ” “ fo reca s t s , ” “expec t s , ” “ i n tends , ” “p l ans , ” “an t i c i pa te s , ”
“p ro j e c t s , ” “ou t l ook , ” “be l i e ve s , ” “e s t ima te s , ” “p red i c t s , ” “po ten t i a l , ” “ con t i nue , ” “p re l im ina ry , ” or t he nega t i ve o f the se t e rms or othe r comparab l e
t e rm ino logy . A l though we be l i e ve t ha t t he expec ta t i ons re f l e c t ed i n t he f o rward ‐ l ook ing s t a tement s a re r ea sonab le , we can g i ve you no as su rance the se
expec ta t i ons wi l l prove t o have been co r rec t .
These f o rward ‐ l ook ing s t a tement s re l a t e t o f u tu re even t s or our f u tu re f i nanc i a l per fo rmance and i n vo l ve known and unknown r i s k s , unce r t a i n t i e s and
othe r f a c to r s t ha t may cause our ac tua l r e su l t s , l e ve l s o f ac t i v i t y , per fo rmance or ach ievement s t o d i f f e r mate r i a l l y f rom any f u tu re r e su l t s , l e ve l s o f
ac t i v i t y , per fo rmance or ach ievement s exp res sed or imp l i ed by the se f o rward ‐ l ook ing s t a tement s . A number o f impor t an t f a c to r s cou ld cause ac tua l re su l t s
t o d i f f e r mate r i a l l y f rom those con ta ined i n or imp l i ed by the se f o rward ‐ l ook ing s t a tement s , i n c l ud ing those f a c to r s d i s cus sed i n our f i l i n g s wi th t he
Secu r i t i e s and Exchange Commi s s i on ( SEC ) , i n c l ud ing our Annua l Repor t on Form 10 ‐K f o r t he f i s c a l yea r ended March 31 , 2016 , wh i ch can be f ound a t t he
SEC ’ s webs i t e a t www.sec . gov . A l l f o rward ‐ l ook ing s t a tement s a t t r i bu tab l e t o us or per sons ac t i ng on our beha l f a re exp re s s l y qua l i f i ed i n t he i r en t i re t y by
t he f o rego ing cau t i ona ry s t a tement s . A l l such s t a tement s speak on l y as o f t he da te made and , excep t as requ i red by l aw , we under take no ob l i ga t i on t o
upda te or rev i se pub l i c l y any f o rward ‐ l ook ing s t a tement s , whethe r as a re su l t o f new i n fo rmat i on , f u tu re even t s or othe rw i se .
No te Rega rd i ng Non ‐GAAP F inanc i a l Data I n fo rmat i on
Booz A l l en d i s c l o se s i n t he f o l l ow ing i n fo rmat i on Ad ju s ted Opera t i ng I n come , Ad ju s ted EB ITDA , Ad ju s ted EB ITDA Marg in , Ad ju s ted Net I n come , Ad ju s ted
D i l u ted EPS , and F ree Cash F low wh i ch a re not recogn i zed measu rement s under GAAP , and when ana l y z i ng Booz A l l en ’ s per fo rmance or l i qu id i t y as
app l i cab l e , i n ve s to r s shou ld ( i ) eva lua te each ad ju s tment i n our reconc i l i a t i on o f Opera t i ng and Net I n come t o Ad ju s ted Opera t i ng I n come , Ad ju s ted
EB ITDA , Ad ju s ted EB ITDA Marg in , and Ad ju s ted Net I n come , and ne t ca sh prov ided by opera t i ng ac t i v i t i e s t o f r ee ca sh f l ows , and t he exp l ana to ry f oo tno te s
rega rd i ng those ad ju s tment s , and ( i i ) use Ad ju s ted EB ITDA , Ad ju s ted EB ITDA Marg in , Ad ju s ted Net I n come , Ad ju s ted Opera t i ng I n come , and Ad ju s ted
D i l u ted EPS i n add i t i on to , and not as an a l t e rna t i ve t o opera t i ng i n come , ne t i n come or D i l u ted EPS as a measure o f opera t i ng re su l t s wi th ca sh f l ow i n
add i t i on t o and not as an a l t e rna t i ve t o ne t ca sh gene ra ted f rom opera t i ng ac t i v i t i e s as a measure o f l i qu i d i t y , each as de f i ned under GAAP . The F inanc i a l
Append i x i n c l udes a reconc i l i a t i on o f Ad ju s ted Opera t i ng I n come , Ad ju s ted EB ITDA , Ad ju s ted EB ITDA Marg in , Ad ju s ted Net I n come , Ad ju s ted D i l u ted EPS ,
and F ree Cash F low t o t he most d i re c t l y comparab l e f i nanc i a l measure ca l cu l a t ed and presen ted i n acco rdance wi th GAAP . Booz A l l en presen t s the se
supp lementa l per fo rmance measures because i t be l i e ve s t ha t the se measures prov ide i n ve s to r s and secu r i t i e s ana l y s t s wi th impor t an t supp lementa l
i n fo rmat i on wi th wh i ch t o eva lua te Booz A l l en ’ s per fo rmance , l ong t e rm ea rn ing s po ten t i a l , or l i qu i d i t y , as app l i cab l e and t o enab l e them t o as se s s Booz
A l l en ’ s per fo rmance on t he same bas i s as management . These supp lementa l per fo rmance and l i qu i d i t y measu rement s may va ry f rom and may not be
comparab l e t o s im i l a r l y t i t l ed measures by othe r compan ie s i n Booz A l l en ’ s i ndus t r y . With re spec t t o our expec ta t i ons under “F i s ca l 2017 Fu l l Yea r Out look”
on s l i de 7 , reconc i l i a t i on o f Ad ju s ted D i l u ted EPS gu idance t o t he c l o se s t co r re spond ing GAAP measure i s not ava i l ab l e wi thou t unreasonab le e f fo r t s on a
f o rward ‐ l ook ing bas i s due t o our i n ab i l i t y t o pred i c t our s tock pr i ce , equ i t y g ran t s and d i v i dend dec l a ra t i ons dur ing t he cour se o f f i s c a l 2017 . Pro je c t i ng
f u tu re s tock pr i ce , equ i t y g ran t s and d i v i dends t o be dec l a red wou ld be neces sa ry t o accu ra te l y ca l cu l a t e t he d i f f e rence be tween Ad ju s ted D i l u ted EPS and
GAAP EPS as a re su l t o f t he e f f e c t s o f t he two ‐ c l a s s method and re l a t ed pos s i b l e d i l u t i on used i n t he ca l cu l a t i on o f EPS . Consequen t l y , any a t tempt t o
d i s c l o se such reconc i l i a t i on wou ld imp l y a deg ree o f prec i s i on t ha t cou ld be con fu s i ng or mis l ead ing t o i n ve s to r s . We expec t t he va r i ab i l i t y o f t he above
cha rges t o have an unpred i c t ab l e , and po ten t i a l l y s i gn i f i c an t , impac t on our f u tu re GAAP f i nanc i a l r e su l t s .
2
EXECUTING AGAINST OUR STRATEGY TO DELIVER
SUSTAINABLE QUALITY GROWTH
ANOTHER STRONG PERFORMANCE BY BOOZ ALLEN HAMILTON
• Making excellent progress against FY17 objectives:
–Differentiating ourselves in the market through offerings that blend consulting and
mission understanding with innovative technology
–Executing against our large backlog by hiring and deploying additional talent
–Operating with efficiency and agility while continuing to invest in growth
• Delivering organic growth that leads the industry, is sustainable, and positions Booz Allen
for stronger performance in future years
• Confident about the state of our business
• Continuing to aggressively pursue opportunities in Federal and Global Commercial markets
• Delivering value to all stakeholders – from clients, to employees, to shareholders
3
FINANCIAL OVERVIEW
WE REMAIN ON A SOLID GROWTH PATH
• Executing with discipline
–Achieving the objectives of our annual plan
–Executing with foresight and agility in line with our long‐term strategy
• Vision 2020 strategy is producing year‐over‐year results
–Revenue growth
–Headcount gains
–Portfolio evolution
4
KEY FINANCIAL RESULTS
FISCAL YEAR 2017 PRELIMINARY RESULTS
Comparisons are to prior fiscal year period
5
Y EAR TO DAT E TH I R D QUART E R
Gross Revenue $4.2 billion 6.0% Increase $1.4 billion 7.4% Increase
Net Income $186.2 million 18.5% Decrease $55.6 million 48.6% Decrease
Adjusted Net Income $195.1 million 5.4% Increase $56.6 million 8.4% Decrease
Adjusted EBITDA $402.0 million 4.0% Increase $122.5 million 1.1% Increase
Diluted EPS $1.23 18.5% Decrease $0.37 47.9% Decrease
Adjusted Diluted EPS $1.30 4.8% Increase $0.38 7.3% Decrease
Total Backlog
$13.5 billion
12% Increase
CAPITAL ALLOCATION
RETAIN CAPITAL FLEXIBILITY TO MAXIMIZE LONG‐TERM RETURN TO
SHAREHOLDERS
• Our cash position continues to improve
• Going forward, we expect to use a range of tools, including:
–Supporting organic revenue growth with capability‐focused acquisitions that
align to our growth strategy
–Effectively managing debt
–Returning excess cash to shareholders in the form of dividends – regular and
special – and share repurchases
• Quarterly dividend increased by 13% to $0.17
• Authorized to repurchase up to ~$300M of additional shares of common stock (1)
(1) Previous share repurchase authorization of $180M increased by $230M to $410M. Approximately $300M Remaining.
6
FINANCIAL OUTLOOK
REVISING FULL‐YEAR GUIDANCE
1) Full Fiscal Year 2017 Estimated Weighted Average Diluted Share Count of 150 million shares; assumes an effective tax rate of 39.1%
7
F I S C A L 2 0 1 7 F U L L Y EAR OUT LOOK
Revenue
Growth in the Range of
Four to Six Percent
Diluted EPS (1): $1.65 ‐ $1.69
Adjusted Diluted EPS (1): $1.70 ‐ $1.74
DIGITAL SOLUTIONS BUSINESS
AN INTERCONNECTED SET OF HIGH‐DEMAND CAPABILITIES
Including systems delivery, digital, cloud, and mobile
• Building a differentiated business on three pillars
–Mission understanding
–Technical depth
–Consultative approach
• SPARC and now Aquilent provide innovation and scalability
• Demonstrated growth in past two years
–Headcount will reach approximately 4,000 with Aquilent acquisition
–Number of digital projects has grown to 350 firm‐wide
• The further we get into implementing our strategy, the more certain we are that it is
the right one
8
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, (iii)
amortization or write‐off of debt issuance costs and write‐off of original issue discount, and (iv) release of
income tax reserves, in each case 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.
10
NON-GAAP FINANCIAL INFORMATION
11
(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) Release of pre‐acquisition income tax reserves
assumed by the Company in connection with the
acquisition of our Company by The Carlyle Group.
(d) Reflects tax effect of adjustments at an assumed
marginal tax rate of 40%.
(e) Excludes an adjustment of approximately $0.6
million and $2.0 million of net earnings for the three
and nine months ended December 31, 2016,
respectively, and excludes an adjustment of
approximately $1.5 million and $3.0 million of net
earnings for the three and nine months ended
December 31, 2015, respectively, associated with the
application of the two‐class method for computing
diluted earnings per share.
(Amounts in thousands, except share and per share data) 2016 2015 2016 2015
Adjusted Operating Income
Operating Income 108,124$ 105,116$ 355,086$ 340,076$
Amortization of intangible assets (a) 1,056 1,056 3,169 3,169
Transaction expenses (b) — — 3,354 —
Adjusted Operating Income 109,180$ 106,172$ 361,609$ 343,245$
EBITDA, Adjusted EBITDA & Adjusted EBITDA Margin
Net income 55,590$ 108,055$ 186,237$ 228,577$
Income tax expense (benefit) 37,025 (20,146) 117,489 58,871
Interest and other, net 15,509 17,207 51,360 52,628
Depreciation and amortization 14,410 16,148 43,588 46,617
EBITDA 122,534 121,264 398,674 386,693
Transaction expenses (b) — — 3,354 —
Adjusted EBITDA 122,534$ 121,264$ 402,028$ 386,693$
Revenue 1,404,638 1,307,663 4,222,213 3,981,421
Adjusted EBITDA Margin 8.7 % 9.3 % 9.5 % 9.7 %
Adjusted Net Income
Net income 55,590$ 108,055$ 186,237$ 228,577$
Amortization of intangible assets (a) 1,056 1,056 3,169 3,169
Transaction expenses (b) — — 3,354 —
Release of income tax reserves (c) — (47,667) — (47,667)
Amortization or write‐off of debt issuance costs and write‐off of
original issue discount 669 1,307 8,236 3,910
Adjustments for tax effect (d) (690) (945) (5,904) (2,832)
Adjusted Net Income 56,625$ 61,806$ 195,092$ 185,157$
Adjusted Diluted Earnings Per Share
Weighted‐average number of diluted shares outstanding 150,607,259 149,900,925 150,143,851 149,501,458
Adjusted Net Income Per Diluted Share (e) 0.38$ 0.41$ 1.30$ 1.24$
Free Cash Flow
Net cash provided by operating activities 65,959$ 92,310$ 283,042$ 180,997$
Less: Purchases of property and equipment (15,411) (16,267) (30,554) (45,829)
Free Cash Flow 50,548$ 76,043$ 252,488$ 135,168$
(Unaudited) (Unaudited)
Three Months Ended
December 31,
Nine Months Ended
December 31,