Q4 2024 Booz Allen Hamilton Holding Corp Earnings Call

Okay.

Operator: Good morning. Thank you for standing by, and welcome to Booz Allen Hamilton's earnings call covering its fourth quarter fiscal year 2024 results. At this time, all participants are in listen-only mode.

Speaker Change: Good morning, Thank you for standing by and welcome to Booz Allen Hamilton's earnings call covering fourth quarter of fiscal year 2024 results.

Speaker Change: At this time, all participants are in listen only mode.

Operator: Later there will be an opportunity for questions. I'd now like to turn the call over to Mr. Nathan Rutledge. Thank you.

Speaker Change: There'll be an opportunity for questions.

Speaker Change: I'd now like to turn the call over to Mr. Nathan Rutledge.

Nathan Rutledge: Good morning, and thank you for joining us for Booz Allen's fourth quarter fiscal year 2024 earnings call. We hope you've 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 16.

Speaker Change: Thank you good morning, and thank you for joining us for Booz Allen's fourth quarter fiscal year 2024 earnings call.

Nathan Rutledge: We hope you've had an opportunity to read the press release, we issued earlier this morning, we.

Nathan Rutledge: We have also provided presentation slides on our website and are now on slide two.

Nathan Rutledge: With me today to talk about our business and financial results are Horacio Rozanski, our President and Chief Executive Officer, and Matt Calderone, our Executive Vice President and Chief Financial Officer. As shown in the disclaimer on slide 3, please keep in mind that some of the items we will discuss this morning are forward-looking and may relate to future events or our 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 disclosed 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. Except as required by law, we undertake no obligation to update or revise them publicly.

Nathan Rutledge: With me today to talk about our business and financial results are Horacio Rozanski, our president and Chief Executive Officer, and Matt Calderon, Executive Vice President and Chief Financial Officer.

Nathan Rutledge: As shown on the 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 our future financial performance and involve known and unknown risks uncertainties and other factors that may cause our actual results to differ materially.

Nathan Rutledge: From forecasted results disclosed in our SEC filings and on this call.

Nathan Rutledge: All forward looking statements are expressly qualified in their entirety by the foregoing cautionary statements 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.

Nathan Rutledge: 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.

Nathan Rutledge: We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our fourth quarter fiscal year 2024 earnings release and slides.

Nathan Rutledge: Numbers presented maybe round it and as such May vary slightly from those in our public disclosure.

Nathan Rutledge: 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 measures, 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 fourth quarter fiscal year 2024 earnings release and slides. Numbers presented may be rounded and, as such, may vary slightly from those in our public disclosure. It is now my pleasure to turn the call over to our CEO and President, Horacio Rozanski. We are now on a slide. Thank you, Nathan. And good morning, everyone.

Speaker Change: It is now my pleasure to turn the call over to our CEO and President Ross sure Rozanski, we are now on slide four.

Nathan Rutledge: Thank you Nathan.

Horacio D. Rozanski: And good morning, everyone and thank you for joining the call.

Horacio D. Rozanski: Thank you for joining the call. Before diving into the content of this earnings call, I would like to share some news regarding our board of directors. On May 21st, Dr. Ralph Schrader, our board chairperson, formed a board of directors of his intention to not stand for re-election, to retire effective July 24th, which is our annual stockholder meeting. It is impossible to fully account for Ralph's contributions to Booz Allen, to our investors and our people, to the country, and to so many of us personally.

Horacio D. Rozanski: Before diving into the content of this earnings call.

Horacio D. Rozanski: I would like to share some news regarding our board of directors.

Horacio D. Rozanski: On May 21, Dr.

Dr. Ralph Shrader, our board chair.

Horacio D. Rozanski: The board of his intention to not stand for reelection.

Horacio D. Rozanski: To retire effective July 24th which is our annual stockholders meeting.

Horacio D. Rozanski: It is impossible to fully account for Ralph contributions to Booz Allen.

Horacio D. Rozanski: To our investors and our people.

Horacio D. Rozanski: To the country.

Horacio D. Rozanski: And to so many of us personally.

Horacio D. Rozanski: Earlier this spring.

Horacio D. Rozanski: Ralph celebrated 50 years with Booz Allen, in a career that's seen many roles, including CEO, and now chair. This is a production of the Center for Autonomous Vehicles. Thank you for your attention.

Horacio D. Rozanski: Ralph celebrated 50 years with Booz Allen.

Horacio D. Rozanski: In a career that spans many roles, including CEO and now chair.

Horacio D. Rozanski: This is a production of the Center for Autonomous Vehicles, and his legacy will forever be ingrained in the fabric of our company, and inspiring as we chart the course for our continued success. Thank you, Ralph, for all you have done for Booz Allen. And, on a personal level, for all you have taught me.

Horacio D. Rozanski: His impact and his legacy.

We will forever be ingrained in the fabric of our company.

Horacio D. Rozanski: Guiding us and inspiring us as we chart the course for our continued success.

Speaker Change: Thank you Ralph.

Speaker Change: For all you have done for Booz Allen.

Speaker Change: And on a personal note.

Speaker Change: For all you have taught me.

Speaker Change: Thank you.

Horacio D. Rozanski: Thank you. I am deeply honored and humbled to have been chosen by our Board of Directors to serve as chair of our board after Rouse retires. I look forward to serving our company as chair and CEO and working closely with our newly appointed lead independent director, Mark Lamont, in a new role.

Speaker Change: I am deeply honored.

Speaker Change: And humbled.

Speaker Change: We have been chosen by our board of directors to.

Speaker Change: To serve as chair of our board after routes retirement.

Speaker Change: I look forward to serving our company as chair and CEO.

Speaker Change: Working closely with our newly appointed lead independent director.

Speaker Change: <unk>.

Speaker Change: In our new roles.

Horacio D. Rozanski: Mark and I will continue Booz Allen's commitment to excellence and value that has been the hallmark of our company for the past 11 decades. Matt and I are proud to share exceptional financial results for fiscal year 2024. The year that ended March 31st marks our best performance since Booz Allen went public. Revenue and earnings both increased more than 15%, nearly all organic. This outstanding performance builds on double-digit revenue growth in the prior fiscal year and solidifies its standing as an organic growth leader in the industry. Year after year,

Mark: Mark and I will continue Booz Allen's commitment to excellence and values that has been the hallmark of our company for the past 11 decades.

Mark: And now.

Mark: Matt and I are proud to share exceptional financial results for fiscal year 2024.

Mark: The year that ended March 31 marks our best performance since Booz Allen went public.

Mark: Revenue and earnings both increased more than 15% nearly all organic.

Mark: This outstanding performance builds on double digit revenue growth in the prior fiscal year.

Mark: And solidifies our standing as an organic growth leader in the industry.

Mark: Year after year Booz Allen consistently delivers.

Horacio D. Rozanski: Booz Allen consistently delivers. This speaks to the relevance of our work, the soundness of our strategy, and the trust our clients place in us. And most importantly, our results are a testament to Booz Allen's amazing team of more than 34,000 purpose-driven professionals this morning.

Mark: This speaks to the relevance of our work.

Mark: The soundness of our strategy.

Mark: On the trust our clients place in us.

Mark: And most importantly, our results are a testament to Booz Allen's amazing team of more than 34000 purpose driven professionals.

Mark: This morning.

Horacio D. Rozanski: I will describe how our bold strategy is fueling our performance and positioning us for the future. I will also address potential market volatility in the near term and share our operational priorities for the fiscal year. Matt will then give an in-depth look at our full fiscal year 2024 results and our guidance for fiscal year 2025. But let's begin with our strategy. Our team's consistent execution of all these things has brought us to where we are today. Booz Allen is 110 years young.

I will describe our volt strategy is fueling our performance and positioning us for the future.

Mark: I will also address potential market volatility in the near term.

Mark: Sure our operational priorities for the fiscal year.

Matt will then give you an in depth look at our full fiscal year 2024 results and our guidance for fiscal year 2025.

Mark: Let's begin with our strategy.

Mark: Our teams consistent execution of volt.

Mark: Has brought us to where we are today.

Mark: Booz Allen is 110 years young.

Horacio D. Rozanski: We are operating at peak performance and are as vibrant as ever, entering our 12th decade. Since our founding, this company has anticipated and led change, for ourselves and for our clients. Today's change vector is embodied in volts, which stands for Velocity, Leadership, and Technology.

Mark: We are operating at peak performance and are as vibrant as ever entering our 12 decade.

Mark: Since our founding this company has anticipated unless change for ourselves and for our clients.

Mark: Today's change vector is embodied involved.

Mark: Which stands for velocity leadership and technology.

Horacio D. Rozanski: Volt has put us at the center of the technology transformation taking place across the federal government. Small powers are experiencing long-term growth in two key ways. First, we have positioned ourselves at the center of missions of national importance, and second, we have become a leader in injecting cutting-edge technologies into this mission. Allow me to take the next few minutes to describe what it looks like for Booz Allen. Thank you for your time.

Mark: Volt has put us at the center of the technology transformation, taking place across the federal government.

Mark: Both powers, our long term growth in two key ways.

Mark: First.

Mark: We have positioned ourselves at the center of missions of national importance.

Mark: And second.

Mark: We have become a leader in injecting cutting edge technologies into these missions.

Speaker Change: How long would you take the next few minutes to describe what it looks like for Booz Allen.

Mark: And for our clients.

Horacio D. Rozanski: One example of these dynamics is our increasing role in the Indo-Pacific region, as I have discussed previously. Booz Allen is deeply committed to the Pacific and has supported U.S. national security priorities there for decades. We continue to support Indopaycom's most pressing requirements, from Accelerated Readiness to Mission. We do so by leveraging technologies such as cyber, 5G, and artificial intelligence to deliver scale solutions at mission speed. In the past six weeks, I have spent time in Japan and Hawaii.

Mark: One example of these dynamics you start increasing role in the Indo Pacific region.

Mark: As I have discussed previously Booz Allen is deeply committed to the Pacific and have supported U S National security priorities there for decades.

Mark: We continue to support in the pay comps most pressing requirements.

Mark: Perm accelerating readiness to mission systems.

Mark: We do so by leveraging technology, such as cyber five G and.

Mark: Michelle intelligence to deliver scaled solutions admission speed.

Mark: In the past six weeks I have spent time in Japan on Hawaii.

Horacio D. Rozanski: I have met with many senior U.S. and allied military and government officials to reinforce our commitment to helping maintain peace and stability in the region. Booz Allen's presence in this vital area continues to grow as we invest in new capabilities, partnerships, and talents. Supporting broadening set of, A second example of the power of volts is our support of the digital transformation of the Department of Veterans Affairs. At the VA, we work closely with our clients.

Mark: I have met with many senior U S and Allied military and government leaders.

Mark: To reinforce our commitment to helping maintain peace and stability in the region.

Mark: <unk> presence in this vital area continues to grow.

Mark: We invest in new capabilities partnerships and talent to support the broadening set of missions.

Mark: A second example of the powerful volt is our support of the digital transformation of the department of Veterans Affairs.

Mark: At the VA, we worked closely with our clients to leverage technologies already proven in the private sector to enhance the care and service of our nation's veterans.

Horacio D. Rozanski: To leverage technologies already proven in the private sector to enhance the care and service of our nation's veterans, from reducing endemic homelessness to optimizing virtual care. It has also allowed us to effectively scale our team and technologies to meet the unprecedented growth of FACT Act claims associated with veterans exposed to toxic substances within the 16 months following the passage of the PACT Act. The VA has processed over one and a half million claims and awarded over $3.8 billion in payments to veterans.

From reducing endemic homelessness to optimizing virtual care and clinical triage services.

Mark: It has also allowed us to effectively scale, our team and technology solutions.

To meet the unprecedented growth of fact act claims associated with veterans exposed to toxic substances.

Mark: Within the 16 months following the passage of the Path Act.

Mark: The VA has processed over one 5 million claims and awarded over $3 $8 billion in payments to veterans.

Horacio D. Rozanski: We help the VA automate important review steps for a portion of this. Shortening the process, and overcoming what would have been a largely manual, manpower-intensive process, for each example, along with similar efforts across multiple federal health agencies, have helped double the size of our health business in the last five years, to roughly $2 billion in fiscal year. [inaudible] of Vault-in-Action is artificial. Before AI came into the public consciousness, Booz Allen anticipated and prepared for the moment we're in now.

Mark: We helped the VA automate important review steps for a portion of these claims.

Mark: <unk> the process and overcoming what would have been a largely manual manpower intensive process.

Mark: These examples along with similar efforts across multiple federal health agencies.

Mark: <unk> doubled the size of our health business in the last five years to roughly $2 billion.

Mark: In fiscal year 'twenty four.

Mark: A third example of.

Mark: Bolt inaction is artificial intelligence.

Mark: Before AI came into the public consciousness, Booz Allen anticipated and prepare for the moment we are in now.

Horacio D. Rozanski: We invested ahead of the market in talent and capability to win early stage work and build a leading position, and so today, AI Becomes Ubiquitous across the U.S. government. We are recognized as the leading provider of AI services to the federal government by Delta X 2024. In FY24, our AI revenue grew to nearly $600 million, and we aspire to grow this business to over a billion dollars in the next couple of years as AI is increasingly integrated into more and more countries.

Mark: We invested ahead of the market in talent and capabilities.

Mark: Early stage work and build a leading position.

Mark: And so today.

Mark: AI becomes ubiquitous across the U S government.

Mark: We are recognized as the leading provider of AI services to the federal government by Delta in 2024 report.

Mark: In FY 'twenty for our AI revenue grew to nearly $600 million.

Mark: And we aspire to grow this business to over $1 billion in the next couple of years.

Mark: As AI is increasingly integrated into more and more contracts, we will continue to invest in our AI talent base through both hiring and upscaling.

Horacio D. Rozanski: We will continue to invest in our AI talent base through both hiring and upscaling. We're also partnering with a range of other technologies to bring commercial dual-use tech to our clients fast. Without a doubt, Booz Allen is a team on the move, involved in working as our accelerator, but beyond all the specific examples.

Mark: We're also partnering with a range of other technology firms to bring commercial dwell use tech to our clients faster.

Mark: Without a doubt Booz Allen is a team on the move.

Speaker Change: And bolt is working is our accelerator.

Speaker Change: But beyond those specific examples the ultimate proof point of our volt strategy is our performance against the goals, we set out in our investment theses, two and a half years ago.

Horacio D. Rozanski: The ultimate proof point of our vault strategy is our performance against the goals we set out in our investment thesis two and a half years ago. As we begin the final year of our three-year trajectory, we are issuing guidance at the top end of our original EBITDA target of $1.2 to $1.3 billion. Fiscal Year 2025, we will have grown our EBITDA by more than a third over the three-year period of the investment. Virtually all of them are organic.

Speaker Change: How should we begin the final year of our three year trajectory. We are issuing guidance at the top end of our original EBITDA target of one two to $1 3 billion.

Speaker Change: In fiscal year 2025.

Speaker Change: Over the three year period of the investment thesis.

Speaker Change: We will have grown our EBITDA by more than a third.

Speaker Change: Virtually all organic.

Horacio D. Rozanski: Our organic performance gives us greater momentum, as well as balance sheet strength and operational resilience, as we look to capture new opportunities in an increasingly challenging market. Looking ahead, we recognize the potential disruption, a contentious election, and other societal and geopolitical factors may cause. Elections can bring about uncertainty, particularly to the budget process.

Speaker Change: Our organic outperformance gives us greater momentum.

Speaker Change: As well as balance sheet strength and operational resiliency as we look to capture new opportunities in an increasingly challenging market.

Speaker Change: Looking at the coming months.

Speaker Change: We recognize the potential disruption a contentious election and other societal of geopolitical factors may cost this fall.

Speaker Change: Elections can bring about uncertainty.

Speaker Change: Particularly to the budget process.

Speaker Change: Despite this.

Horacio D. Rozanski: There are two things we are certain. The clients we serve are focused on fulfilling their missions in service to our nation, and we are poised to support them every step of the way. As in prior years, our operating philosophy for FY25 is to build momentum in the first half of the fiscal year to mitigate any increasing volatility in the second half. To do this, our operational priorities include the following.

Speaker Change: There are two things, which we are certainly.

Speaker Change: The clients, we serve are focused on fulfilling their missions and service to our nation.

Speaker Change: And we are poised to support them every step of the way.

Speaker Change: As in prior years, our operating philosophy for FY 'twenty five is to build momentum in the first half of the fiscal year to mitigate any increasing volatility in the second half.

Speaker Change: To do this our operational priorities include the following.

Horacio D. Rozanski: First, we must take full advantage of our record proposal pipeline, which includes a number of large new programs and re-competes. We will continue to transform how we execute our existing... We seek to increase the speed and precision with which we deliver key technologies into programs and to drive efficiency and effectiveness across all of our support, We will continue to implement Volt at full speed, maximizing the value of our increased investments in people, market positions, and new technology.

Speaker Change: First.

Speaker Change: We must take full advantage of our record proposal pipeline.

Speaker Change: Which includes a number of large new programs and Recompete.

Speaker Change: Second.

Speaker Change: We will continue to transform how we execute our existing business.

Speaker Change: We seek to increase the speed and precision with which we deliver key technologies into programs.

Speaker Change: And to drive efficiency and effectiveness across all of our support functions.

Speaker Change: And third.

Speaker Change: We will continue to implement bolt at full speed.

Speaker Change: Maximizing the value of our increased investments in people market positions and new technologies.

Horacio D. Rozanski: Our overarching goal for FY25 is to further differentiate Booz Allen by demonstrating our unique ability to drive technology into mission outcomes faster and better than anyone else, while respectful of the inherent volatility in our environment. We remain very optimistic about our growth. The Booz Allen team is marked by excellence.

Speaker Change: Our overarching goal for FY 'twenty five is to further differentiate booz Allen by demonstrating our unique ability to drive technology into mission outcomes faster and better than anyone else.

Speaker Change: In summary.

Speaker Change: While respectful of the inherent volatility in our environment.

Speaker Change: We remain very optimistic about our growth prospects.

The Booz Allen team is market tested.

Speaker Change: And exceptional.

Horacio D. Rozanski: I am in awe of the incredible people I have the privilege of working with, of the impact they have on our clients, and of the outstanding performance they create year after year. Their skill and passion are at the center of who we are as a company. And they are the reason for our success as Nomad.

Speaker Change: I mean, all of the incredible people I have the privilege to work with.

Speaker Change: Of the impact they have on our clients and all of the outstanding performance they create year after year.

Speaker Change: Their skill and passion are at the center of who we are as a company.

Speaker Change: And they are the reason for our continued success.

Speaker Change: And now Matt.

Matthew A. Calderone: It is now over to you to take us through our financial results and fiscal year 2025 plan. Thank you, Rossi. Good morning, everyone.

Matthew A. Calderone: Over to you to take us through our financial results and fiscal year 2025 guidance.

Matthew A. Calderone: Thank you Raphael and good morning, everyone.

Matthew A. Calderone: I've spent a good deal of time recently thinking about Booz Allen's 110-year legacy. Foresight, Innovation, Execution, and Transformation. Booz Allen is the ultimate compound.

Matthew A. Calderone: I've spent a good deal of time recently thinking about Booz Allen's 110 year legacy of foresight innovation.

Matthew A. Calderone: Execution and transformation.

Matthew A. Calderone: Booz Allen is the ultimate compound or.

Matthew A. Calderone: Quarter after quarter, year after year, we set goals and we deliver. Always driving forward, one step building on the one before. This creates exceptional value for our clients, our people, and our shareholders. In this spirit, we continue to build in the fourth quarter, delivering excellent results to complete an extraordinary fiscal year 2021. By almost any financial metric, this was the best fiscal year in our history.

Matthew A. Calderone: Quarter after quarter year after year, we set goals and we deliver.

Matthew A. Calderone: Louis is driving forward each step building on the one before.

Matthew A. Calderone: This creates exceptional value for our clients our people.

Matthew A. Calderone: And our shareholders.

Matthew A. Calderone: In this spirit, we continued to build in the fourth quarter.

Matthew A. Calderone: Excellent results to complete an extraordinary fiscal year 2024.

Matthew A. Calderone: By almost any financial metric this was the best fiscal year in our history.

Matthew A. Calderone: Our vote strategy is working. We enter fiscal year 2025 with significant strategic, operational, and financial moments. Once again, we are positioned to deliver robust organic growth, strong earnings and free cash flow, and exceptional shareholder value. This morning, I will start by briefly touching on our fourth quarter highlights.

Our volt strategy is working.

Matthew A. Calderone: We enter fiscal year 2025 with significant strategic operational.

Matthew A. Calderone: And financial momentum.

Matthew A. Calderone: Once again, we are positioned to deliver robust organic growth.

Matthew A. Calderone: Strong earnings and free cash flow and exceptional shareholder value.

Matthew A. Calderone: This morning, I will start by briefly touching on our fourth quarter highlights.

Matthew A. Calderone: Then delve deeper into our fiscal 2024 performance. And finally, we cover our Fiscal Year 2025 Guide. Please turn now to slide 6.

Matthew A. Calderone: Then delve deeper into our fiscal 2020 for performance.

Matthew A. Calderone: And finally cover our fiscal 2025 guidance.

Matthew A. Calderone: Please turn now to slide six.

Matthew A. Calderone: I am proud to say that we met or exceeded all of our objectives. The Bulletproof Executive 2013, We continued to build on many of the trends that Horacio and I have highlighted on recent calls, positioning the Company in areas of Enduring National Importance, at the Intersection of Mission and Technology, and delivering remarkably consistent performance.

Matthew A. Calderone: I am proud to say that we met or exceeded all of our objectives for the fourth quarter.

Speaker Change: We continued to build on many of the trends that Horacio and I have highlighted on recent calls.

Speaker Change: Positioning the company in areas of enduring national importance at.

Speaker Change: At the intersection of mission and technology.

Speaker Change: Delivering remarkably consistent performance.

Matthew A. Calderone: Operating efficiently while investing in the future. Building Momentum and Resilience, to cover a few of the financial highlights for our fourth quarter. Total revenue was approximately $2.8 billion, up 14% year-over-year. However, all of this growth was organic. Adjusted EBITDA grew to $287 million, 24% over the prior year. This translated to an adjusted EBITDA margin of 10.3%. We generated $1.33 in adjusted diluted earnings per share, up 32% year over year.

Speaker Change: Operating efficiently while investing in the future.

Speaker Change: And building momentum and resilience.

Speaker Change: To cover a few of the financial highlights for our fourth quarter.

Speaker Change: Total revenue was approximately $2 8 billion.

Speaker Change: Up 14% year over year.

Speaker Change: All of this growth was organic.

Speaker Change: Adjusted EBITDA grew to 287 million, 24% over the prior year quarter.

Speaker Change: This translated to an adjusted EBITDA margin of 10, 3%.

Speaker Change: We generated one dollar and 33 and adjusted diluted earnings per share up 32% year over year.

Matthew A. Calderone: We added 364 net client staff and recorded a book-to-bill of 0.82 times, in line with our expectations. Finally, we returned $194 million of capital to investors in new Dividends and Share Purchases, and the fourth. Thanks to the hard work of people across our company, we close the fiscal year stronger than expected. For the full fiscal year, total revenue grew 15% year-over-year to $10.7 billion.

Speaker Change: We added 364 net client staff and recorded a book to Bill of 0.82 times in line with our expectations.

Speaker Change: Finally, we returned $194 million of capital to investors.

Speaker Change: Through dividends and share repurchases in the fourth quarter.

Speaker Change: Thanks to the hard work of people across our company.

As the fiscal year stronger than expected.

Speaker Change: For the full fiscal year total revenue grew 15% year over year to $10 7 billion.

Matthew A. Calderone: This exceeded the top end of our guide, driven by strong demand. Healthy Hiring Across Our Portfolio and Higher Than Anticipated Billable Expenses in the 4th, organic revenue was up 14.5% year over year, and revenue excluding billable expenses increased 14.4%. Our revenue growth was broad. Our defense business continued to accelerate. Revenue grew about 20% year over year, with double-digit growth across most portions of the defense portfolio. Performance in our civil business was also strong, up roughly 18% from last fiscal year. Our civil sector has now reported nine consecutive quarters of double digit growth.

Speaker Change: This exceeded the top end of our guidance driven by strong demand.

Speaker Change: Healthy hiring across our portfolio and higher than anticipated billable expenses in the fourth quarter.

Speaker Change: Organic revenue was up 14, 5% year over year.

Speaker Change: And revenue, excluding billable expenses increased 14, 4%.

Speaker Change: Our revenue growth was broad based.

Speaker Change: Our defense business continued to accelerate.

Speaker Change: Revenue grew about 20% year over year with double digit growth across most portions of the defense portfolio.

Speaker Change: Performance in our civil business was also excellent up.

Speaker Change: Roughly 18% from last fiscal year.

Speaker Change: Our civil sector has now reported nine consecutive quarters of double digit organic growth.

Matthew A. Calderone: Our intelligence business is on a strong vector for the future. Revenue grew 5% year-over-year, exceeding our expectations. We are pleased with both the supply side and demand side momentum. Finally, our global commercial business, which represented 2% of revenue in the fiscal year, was down 25% year over year.

Our intelligence business is on a strong vector for the future.

Speaker Change: Revenue grew 5% year over year exceeding our expectations.

Speaker Change: We are pleased with both the supply side and demand side momentum in this business.

Speaker Change: Finally, our global commercial business, which represented 2% of revenue in the fiscal year was down 25% year over year.

Matthew A. Calderone: Reflecting previously disclosed divestment. Given its small relative size, going forward, we will not report our commercial results separately. Moving to the demand picture on slide 7, we ended fiscal year 2024 with net bookings of $13.3 billion and a trailing 12-month book-to-bill of $1.25 trillion. Total backlog as of March 31st. $33.8 billion dollars, up 8.4% year over year. Looking ahead, our fiscal year 2025 qualified pipeline is robust, standing at $63.8 billion, or 38% higher. Owner Normal Owner Microsoft Office Word Microsoft, Inc. It was almost a year ago, This includes a number of exciting projects across the portfolio, as well as some accelerated and our civil and defense.

Speaker Change: Reflecting previously disclosed divestitures.

Speaker Change: Given its small relative size going forward, we will not report our commercial results separately.

Speaker Change: Moving to the demand picture on slide seven we ended fiscal year 2024, with net bookings of $13 3 billion and a trailing 12 month book to Bill of 125 times.

Speaker Change: Total backlog as of March 31 was $33 $8 billion up.

Speaker Change: Eight 4% year over year.

Speaker Change: Looking ahead, our fiscal year 2025 qualified pipeline is robust.

Standing at $63 8 billion or 38% higher than a year ago.

Speaker Change: This includes a number of exciting opportunities across the portfolio as well as some accelerated recompete in our civil and defense businesses.

Matthew A. Calderone: With federal funding in place through September, we are working to aggressively capture and start as much work as possible in advance of the upcoming election and the new government. In short, we have the backlog, pipeline, and market momentum necessary to drive future growth. Turning now to the supply side, as Horacio noted, we closed the fiscal year with more than 34,000 employees.

Speaker Change: With federal funding in place through September we are working to aggressively capture and start as much work as possible in advance of the upcoming election, and the new government fiscal year.

Speaker Change: In short, we have the backlog pipeline and market momentum necessary to drive future growth.

Speaker Change: Turning now to the supply side as Horacio noted, we closed the fiscal year with more than 34000 employees.

Matthew A. Calderone: Our client staff headcount increased 7.4% year over year, setting us up well for fiscal year 2025. Total headcount was up 7.2%. Our relentless focus on culture and the employee experience at Booz Allen continues to pay dividends, not just in our consistent headcount but also in our low attrition. Strong Referral and Application. Moving now to the bottom.

Speaker Change: Our client staff head count increased seven 4% year over year, setting us up well for fiscal year 2025.

Total head count was up seven 2%.

Speaker Change: Our relentless focus on culture and the employee experience at Booz Allen continues to pay dividends.

Speaker Change: Not just in our consistent head count growth, but also in our lower attrition.

Speaker Change: And strong referral and application numbers.

Speaker Change: Moving now to the bottom line.

Matthew A. Calderone: We earned $1.175 billion in adjusted EBITDA for the fiscal year. This is 16% higher than in fiscal year 2023 and at the top end of our updated guidance, we have an adjusted EBITDA margin of 11%, flat year over year, in line with our expectations. This profit growth was generated by our excellent top line group, with strong contract-level performance and a disciplined approach to operations and investment. Our leaders continue to manage the business very well, and this has allowed us to do three things simultaneously.

Speaker Change: Earned 1.1 dollars $75 billion and adjusted EBITDA for the fiscal year.

Speaker Change: This is 16% higher than in fiscal year 2023, and at the top end of our updated guidance range.

Speaker Change: Our adjusted EBITDA margin of 11% was flat year over year in line with our expectations.

Speaker Change: This profit growth was generated by our excellent top line growth strong contract level performance and a disciplined approach to operations and investment.

Speaker Change: Our leaders continue to manage the business very well.

Speaker Change: This has allowed us to do three things simultaneously.

Matthew A. Calderone: Increased investment in the talent, technologies, and partnerships needed to solve emerging mission challenges. Transform key corporate functions, and continue to get scale in our operation. Working down the P&L, our net income was $606 million.

Speaker Change: Increased investment in talent technology and partnerships needed to solve emerging mission challenges.

Speaker Change: Transform key corporate functions.

Speaker Change: And continue to get scale in our operations.

Speaker Change: Working down the P&L, our net income was $606 million, 123% higher year over year.

Matthew A. Calderone: 123% higher year over year. Adjusted net income increased 19% year-over-year to $719 million; diluted earnings per share grew to $4.59. Up 126% year-over-year. Adjusted diluted earnings per share grew 21% year over, to $5.50. These results include significantly higher interest expense for the fiscal year, offset in part by a lower than anticipated ADEPT's tax rate in the fourth quarter.

Speaker Change: Adjusted net income increased 19% year over year to $719 million.

Speaker Change: Diluted earnings per share grew to $4 59 per share.

Speaker Change: 126% year over year.

Speaker Change: Adjusted diluted earnings per share grew 21% year over year.

Speaker Change: <unk> $5 50.

Speaker Change: These results include significantly higher interest expense for the fiscal year.

Speaker Change: Offset in part by a lower than anticipated tax rate in the fourth quarter.

Matthew A. Calderone: Moving now to the balance. We ended the fiscal year with $554 million of cash on hand, net debt of $2.86 billion, and a net leverage ratio of 2.4 times adjusted EBITDA for the trailing 12 months. We have ample capacity to continue executing our Disciplined Capital Deployment Strategy. Pre-cash flow for the fiscal year was $192 million.

Speaker Change: Moving now to the balance sheet, we ended the fiscal year with $554 million of cash on hand.

Speaker Change: Net debt of $2 $86 billion.

Speaker Change: And a net leverage ratio of two four times adjusted EBITDA for the trailing 12 months.

Speaker Change: We have ample capacity to continue executing our disciplined capital deployment strategy.

Speaker Change: Free cash flow for the fiscal year was $192 million.

Matthew A. Calderone: The result of $259 million of cash from operating activities less $67 million of capital. Note that this cap- This bill excludes $16 million of accrued expenditures that were paid in early fiscal year 2025. From a free cash flow perspective, this was offset by an unanticipated $13 million cash tax outlay related to contested DC taxes, which is further described in our 10.

Speaker Change: The result of $259 million of cash from operating activities less $67 million of Capex.

Speaker Change: Note that this capex excludes $16 million of accrued expenditures that were paid in early fiscal year 2025.

Speaker Change: From a free cash flow perspective, this was offset by an unanticipated $13 million cash tax outlay related to contested DC tax assessments.

Speaker Change: Which is further described in our 10-K.

Matthew A. Calderone: Collections were strong for the year, and Cash Outflows Remain Consistent With Our Outsized Growth and Ongoing Investments in Our Businesses. Excluding one-time events, cash performance improved in fiscal year 2020. And this will remain an area of focus going forward. Turning to capital deployment on slide 8. In fiscal year 2024, we returned $668 million of capital to shareholders. This included $415 million in share purchases at an average price of $116.81 per share, as well as $253 million in quarterly cash.

Speaker Change: Collections were strong for the fiscal year.

Speaker Change: And cash outflows remain consistent with our outsized growth and ongoing investments in our business.

Speaker Change: Excluding one time events cash performance improved in fiscal year 2024, and this will remain an area of focus going forward.

Turning to capital deployment on slide eight in fiscal year 2024, we returned $668 million of capital to shareholders.

Speaker Change: This included $415 million in share repurchases at an average price of $116 81 per share.

Speaker Change: As well as $253 million and quarterly cash dividends.

Matthew A. Calderone: Additionally, we made $23 million of strategic investments through our corporate venture capital. While we completed no acquisitions last fiscal year, strategic acquisitions are still an important part of our capital deployment strategy, as we focus on bringing technology to missions at speed and scale. We are pursuing a healthy pipeline of small to mid-sized companies. As a firm, we remain committed to maximizing long-term shareholder value through efficient capital allocation. Finally, I'll note that our board has approved a quarterly dividend of $0.51 per share, which will be payable on June 28th to stockholders of record as of June 13th, 2018.

Additionally, we made $23 million of strategic investments through our corporate venture capital program.

Speaker Change: While we completed the acquisitions last fiscal year strategic acquisitions are still an important part of our capital deployment strategy.

Speaker Change: As we focus on bringing technology to mission at speed and scale.

Speaker Change: We are pursuing a healthy pipeline of small to mid sized tuck ins.

Speaker Change: As a firm we remain committed to maximizing long term shareholder value through efficient capital allocation.

Speaker Change: Finally, I'll note that our board has approved a quarterly dividend of <unk> 51 per share, which will be payable on June 28, two.

Speaker Change: Stockholders of record as of June 13th.

Matthew A. Calderone: The board also approved an increase of $525 million to our share of purchase authorization, bringing our available capacity to $1 billion as of March 30. I will now take you through our fiscal year 2025 guide. Please turn the slide.

Speaker Change: The board also approved an increase of $525 million to our share repurchase authorization.

Speaker Change: Bringing our available capacity to $1 billion.

Speaker Change: As of March 31.

Speaker Change: I will now take you through our fiscal year 2025 guidance.

Speaker Change: Please turn to slide nine.

Matthew A. Calderone: Given how our fiscal year aligns with government funding, we typically plan for a strong first half and a more uncertain second half. We are doing the same this fiscal year. We enter this fiscal year with significant momentum, but anticipate continued on because of Societal and Geopolitical Conflicts, the Upcoming Election, and Possible Disagreements about the Next Budget Cycle.

Speaker Change: Given our fiscal year aligns with government funding cycles, we typically plan for a strong first half and a more uncertain second half.

Speaker Change: We are doing the same this fiscal year.

Speaker Change: We entered this fiscal year with significant momentum.

Speaker Change: But anticipate continued uncertainty from societal and geopolitical conflicts the upcoming election and possible disagreements about the next budget cycle.

Matthew A. Calderone: In this environment, we are focused on controlling what we can control. We are positioning our business for continued growth to keep driving. [inaudible] Let's now walk through our fiscal year 2025. At the top.

Speaker Change: In this environment, we are focused on controlling what we can control.

Speaker Change: We are positioning our business for continued growth.

Speaker Change: To keep driving forward.

To keep compounding.

Speaker Change: Let's now walk through our fiscal year 2025 guidance.

Speaker Change: At the top line, we expect organic revenue growth of 8% to 11%.

Matthew A. Calderone: We expect organic revenue growth of 8 to 11%. This screen takes into account several variables, including the extent to which we win and start work, the potential for drawn-out federal budget negotiations, and the timing and pace of headcount. We are again targeting mid-single-digit headcount for the fiscal year.

Speaker Change: This range takes into account several variables, including the extent to which we win and start work there.

Speaker Change: The potential for drawn out federal budget negotiations and the timing and pace of head count gains.

Speaker Change: We are again targeting mid single digit head count growth for the fiscal year.

Matthew A. Calderone: We expect to deliver adjusted EBITDA dollars in the range of $1.26 to $1.3 billion. As Horacio noted, this is the high end of our investment. We expect to achieve, Almost Entirely Through Organic. Creating significant balance sheet capacity for the company. The implied full fiscal year adjusted EBITDA margin is about 11%, on par with fiscal year. We expect a debt of between $5 and 80 cents, meaning $6.05 per share. This assumes an adjusted effective tax rate of between 23 and 25 percent.

Speaker Change: We expect to deliver adjusted EBITDA dollars and a range of $1 two six to $1 3 billion.

Speaker Change: As Roger noted this is the high end of our investment thesis range.

Speaker Change: We expect to achieve this.

Speaker Change: Almost entirely through organic performance, creating significant balance sheet capacity for the future.

Speaker Change: The implied full fiscal year adjusted EBITDA margin is about 11%.

Speaker Change: On par with fiscal year 2024.

Speaker Change: Okay.

Speaker Change: We expect a depth of between $5 80.

Speaker Change: And $6 <unk> per share.

Speaker Change: This assumes an adjusted effective tax rate of between 23% and 25% and.

Matthew A. Calderone: An increase from the prior fiscal year, as well as a marginally higher interest rate in the range of $180 to $190 million. We expect operating cash flow of between $825 million and $925 million, and Free Cash of between $725 million and $825 million. This assumes CapEx spend of around $100 million, and including the previously mentioned accrued expended that shifted from the fiscal fourth quarter and was paid in early fiscal year 2025.

Speaker Change: An increase from the prior fiscal year.

As well as the marginally higher interest expense in the range of $180 million to $190 million.

Speaker Change: Lastly.

Speaker Change: We expect operating cash flow of between $825 million and $925 million.

Speaker Change: And free cash flow of between $725 million and $825 million.

This assumes capex spend of around $100 million.

Speaker Change: Including the previously mentioned accrued expenditure that shifted from the fiscal fourth quarter and was paid in early fiscal year 2025.

Matthew A. Calderone: In closing, I want to reiterate how proud I am of the outstanding year we just delivered. The momentum we built translates into a strong guide for fiscal year 2025 and a great finish to our three-year investment. Our Volt strategy is working, and we continue to deliver value to all of our stakeholders. This is a real testament to our people and the Enduring Power of Booz Allen. With that. Operator, let's open the line. Thank you. If you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

Speaker Change: In closing I want to reiterate how proud I am of the outstanding year, We just delivered.

Speaker Change: The momentum we built translates into a strong guide for fiscal year 2025.

Speaker Change: <unk> finished two or three year investment thesis.

Speaker Change: Our vault strategy is working.

Speaker Change: And we continue to deliver value to all of our stakeholders.

Speaker Change: This is a real testament to our people.

Speaker Change: And the enduring power of Booz Allen.

Speaker Change: With that.

Speaker Change: Operator, let's open the line for questions.

Speaker Change: Thank you if you'd like to ask a question. Please press star one one.

Speaker Change: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Operator: Our first question comes from Mariana Perez Mora with Bank of America. Your line is open. Good morning, everyone.

Speaker Change: Our first question comes from Mariana Perez Mora with Bank of America. Your line is open.

Speaker Change: Good morning, everyone and thank you.

Mariana Perez Mora: Thank you. So my question is about this recent memo on AI that the Biden administration put forward. And the memo mandates that each agency will have to appoint a chief AI officer. Have you seen any of that increased demand come through, or how are you thinking about opportunities as these new officers actually think about their AI strategy, use cases, and all those? Hola, Mariana.

Speaker Change: So good morning. Good afternoon is about this weekend.

Speaker Change: Nemo on AI debate on ministration put forward and the memo mandates that each agency will have to appoint.

Speaker Change: AI also sir.

Speaker Change: Have you seen any of those like that increase demand come through or how you're thinking about opportunities as these new officers to actually think about their AI strategy use cases in all of those things.

Horacio D. Rozanski: Thank you for the question. Here's how I think about it. AI is becoming an integral part of how the federal government operates. We have seen it more and more over the last couple of years.

Speaker Change: Hello, Mariana. Thank you for the question.

Speaker Change: Here's how I think about it.

Speaker Change: AI is becoming an integral part of how the total government off rates, we are seeing it more and more.

Speaker Change: Over the last couple of years, you've heard me talk about things moving from demonstration projects. The prototypes were now entering the scale phase and so it makes sense.

Horacio D. Rozanski: You've heard me talk about things moving from demonstration projects to prototypes. We're now entering the scale phase. And so it makes sense that governing AI, correcting these agencies, managing the resources and the investments against it should be done. And it makes sense that in some of these agencies, there are already chief data and AI officers, and they're making a difference. And Booz Allen's been poised to take advantage of this growth in AI now for several years. I think you know we've been talking about this since before it became popular.

Speaker Change: The governing AI correctly, these agencies that managing our resources and the investments against it be Don and it makes sense that some of these agencies theres already data and AI officers and they're making a difference in and booz Allen's be poised to take advantage of this growth in AI now for several years.

Speaker Change: I think you know we've been talking about this from before it became popular.

Horacio D. Rozanski: And our business is growing, as I mentioned in the prepared remarks. We are looking at roughly $600 million. Business Now, we are thinking that business alone will reach a billion dollars in a couple of years. But more importantly, we are seeing AI become a differentiator across a lot of our procurements. And the fact that we have a leading position that is recognized externally, that we're doing work that our clients see as nobody else being able to do, I think it opens doors and opportunities for Booz Allen that we're very excited about.

Speaker Change: And our business is growing as I mentioned in the prepared remarks, we are looking at a roughly 600 million dollar.

Speaker Change: This is now we're thinking that business alone will reach $1 billion in in a couple of years, but more importantly, we are seeing AI become a differentiator across.

Speaker Change: A lot of our procurements and the fact that we have a leading position that is recognized externally that we're doing work on our clients see us nobody else being able to do I think opens doors and opportunities for.

Horacio D. Rozanski: And as we look forward, we really think that AI is really where we are. It's AI and cyber, where we also have a leading position. It's AI and space, where we're making significant inroads. It's AI and zero trust, and AI and communications.

Speaker Change: For Booz Allen that we're very excited about and as we look forward. We really think that AI is really AI and its AI on fiber, where we also have a leading position, it's AI space, where we're making significant inroads it's AI <unk>.

Speaker Change: Zero Trust AI in communications, and so I think booz Allen's ability to continue to expand and grow as a result of that has to be differentiated is only going to increase in the years to come.

Horacio D. Rozanski: And so I think Booz Allen's ability to continue to expand and grow as a result of that and to differentiate itself is only going to increase in the years to come. Thank you. So you mentioned AI as a differentiator. Could you please also give us some details or color around these, like contracts that you have for recompete? What is the recompete risk and how do you think these skills position you towards, like, having a stronger P win?

Speaker Change: Thank you. So you mentioned AI also differentiate sorry could you. Please also give us some details or color around the contracts that you have a recompete what is the recompete risk. How you think these skills position you to watch like having a strong appealing.

Horacio D. Rozanski: Oh, sure. Let me frame this conversation in a couple of ways. The first one is, you know, we're coming off our best year ever, right?

Speaker Change: Sure let me frame it.

Speaker Change: This conversation at a couple of ways.

Speaker Change: First one is we're coming off our best year ever right and we're entering our FY 'twenty five year with a lot of momentum.

Horacio D. Rozanski: And we're entering our FY25 year with a lot of momentum. VOLT, our strategy is working and, you know, the V in VOLT is for velocity and we are faster, than ever before were strategically really well-positioned and, you know, as we said earlier, while we recognize the uncertainties, that an election year can bring, we are guiding to the top end of our investment thesis, and we're entering this year with momentum and with resiliency, both in our balance sheet, in our portfolio, and everything else.

Speaker Change: Volt, our strategy is working and.

Speaker Change: The VM voltage for velocity, and we are faster than ever before we're strategically really well position and <unk>.

Speaker Change: We said earlier, while we recognize the uncertainties.

Speaker Change: That election year come ring.

Speaker Change: Our guiding to the top end of our investment thesis and we're entering this year with momentum and with resiliency, both in our balance sheet and our portfolio and everything else.

Horacio D. Rozanski: Recompetes are a part of our business. The reality of the business is, if you look at it over the last five or 10 years, we've gone from almost no billion-dollar contracts to now a significant portfolio of billion-dollar plus contracts. And if these are five-year contracts, 20% of those, on average, will get recompeted every year.

Speaker Change: Re competes are part of our business.

The reality of the business is if you look at it over the last five or 10 years, we've gone from almost no building contracts to now a significant portfolio of billion dollar plus contracts and if these are five year contracts, 20% of those on average will get re competed every year this year.

Horacio D. Rozanski: This year, you know, there's a little concentration of that in our health business and a little bit in our defense business. As I look at those, we are really well-positioned by the quality of our delivery, and the uniqueness of our offerings. And the work that we do, and this is all wrapped inside of a pipeline that is a record pipeline, close to $64 billion of opportunity. So we're looking at the year with optimism.

Speaker Change: The concentration of that in our health business.

Speaker Change: And a little bit in our defense business as I look at those are we are really well positioned by the quality of our delivery by the uniqueness over offerings and by the work that we do and this is all wrapped inside of a pipeline that is a record pipeline.

Speaker Change: Close to $64 billion.

Speaker Change: Of opportunity.

Speaker Change: So we're looking at a year with optimism, we're very focused laser focused on winning a recompete.

Horacio D. Rozanski: We're very focused, laser focused, on winning our re-competes, but also capturing new work and taking advantage of the fact that a number of these re-competes come with increased scope and increased ceiling, which also presents opportunities. Thank you so much and congratulations on the appointment. And congratulations to all in retirement. Thank you so much.

Speaker Change: But also capturing new work and taking advantage of the fact that a number of these re competes come with increased scope and increase ceiling, which also presents an opportunity.

Speaker Change: Thank you so much and congratulations on the appointment and congratulations Ralph and retirement.

Speaker Change: Thank you so much.

Mariana Perez Mora: Thank you. Our next question comes from Robert Spingarn with Milius Research. Your line is open. Well, good morning. Good morning.

Speaker Change: Thank you. Our next question comes from Robert Spingarn with Melius Research. Your line is open.

Speaker Change: Well good morning.

Speaker Change: Good morning.

Speaker Change: Yeah.

Operator: I had a couple of questions for you, but I wanted to. Let's start, Matt, with you on the growth. You know, you've talked about hitting high single-digit organic growth and about 3 to 5 percent headcount growth for the full year and a book-to-bill of around 1.2 to 1.3 in order to hit that high single-digit organic growth. Perhaps a little bit above that, you've already said that you anticipate mid-single-digit headcount growth this year.

Robert Michael Spingarn: I had a couple of questions for you but wanted to.

Operator: So what should we anticipate for book-to-bill? And then, as a follow-up to that, are there any significant re-competes that you have coming up this year that we should be thinking about? Yeah, thanks, Rob. I'll take him in turn.

Matthew A. Calderone: Matt with you on.

Matthew A. Calderone: On the growth you've talked about.

Matthew A. Calderone: Hitting high single digit organic growth and about 3% to 5% head count growth for the full year and a book to bill around one two to one three.

Speaker Change: In order to hit that high single digit organic growth now you're guiding perhaps a little bit above that you've already said that you anticipate mid single digit head count growth. This year. So what should we anticipate for book to Bill.

Speaker Change: And then as a follow up to that are there any significant re competes that you have coming up this year that we should be thinking about.

Robert Michael Spingarn: Like I said, we're entering the year with a lot of momentum, both on the supply side and the demand side. Starting the year on the supply side with headcount growth of about 7.4%, so above the mid-single digit headcount target that we've talked about historically, which is part of the reason we're guiding it to robust 8 to 11% organic growth and then on the demand side 1.25 times. So right in line with where we want to be, to give you a feel for how we anticipate the year's going to play out, we do expect a quarterly growth profile on a year-over-year basis to be strong, but maybe a little more even than last year, primarily driven by some quarterly comps.

Speaker Change: Yes, thanks, Rob I'll take them in turn.

Speaker Change: Okay. So what you said.

Speaker Change: Entering the year with a lot of momentum both on the supply side and the demand side, starting the year on the spy Phi with head count growth of about seven 4% so above the mid single digit.

Speaker Change: Head count targets that we've talked about historically, which is part of the reason, we're guiding to a robust 8% to 11% organic growth.

Speaker Change: And then on.

On the demand side, one five times, which is sort of right in line with where we want to be.

Speaker Change: To give you a feel for how we anticipate there is going to play out do you expect that quarterly growth profile on a year over year basis to be strong, but maybe a little more even than last year, primarily driven by some.

Robert Michael Spingarn: You recall last year we grew 16% in the first half, and I think we'll see a similar pattern for margins where they're more stable than our historical patterns, similar to what we saw last year. We've had a solid start to the year.

Speaker Change: Quarterly comps, you'll recall last year, we grew 16% in the first half.

Speaker Change: We will see a similar pattern for margins, where they are more stable than our historical patterns.

Speaker Change: Similar to what we saw last year.

Matthew A. Calderone: I'm not going to call where we're going to end up on book-to-bill, but we've had a really good start, particularly on the demand side. Recompetes are part of that, but as Horacio said, we've got a really robust pipeline. It's up 38% from where we were at this point last year.

Speaker Change: The solid start to the year I'm not going to.

Speaker Change: Call, where we're going to end up on book to Bill.

Speaker Change: Well, we've had a really good start, particularly on the demand side.

Speaker Change: Yeah. It's.

Speaker Change: Re competes are part of that but as Raphael said, we've got a really robust pipeline, it's up 38%.

Speaker Change: Where we were at this point last year. So the fact that we're targeting mid single digit headcount growth for this year, which typically sets us up for next year.

Matthew A. Calderone: So the fact that we're targeting mid-single-digit headcount growth for this year, which typically sets us up for next year, and we've talked about, you know, the robustness of our backlog, our book-to-bill, and, obviously, our pipeline, gives you a feel for how we're thinking about growth over the next year. Okay, and then Horacio, just for you, high level, and you did, you talked a bit about AI in the prior question and throughout the call, but you've been at the forefront of things like AI, 5G, cyber all along, and we think forward to the next 5 to 10 years.

Speaker Change: We've talked about the robustness of our backlog.

Speaker Change: Book to Bill and obviously, our pipeline I think gives you a feel for for how we're thinking about growth over the medium term.

Speaker Change: Okay, and then Horacio just for you high level and you did it you talked a bit about AI.

Speaker Change: In the prior question and throughout the call, but you've been at the forefront of things like AI <unk> cyber all along and when we think forward next five to 10 years.

Matthew A. Calderone: Curious, in terms of the major growth trends where you want to be a leader, how should we think about things like quantum computing and post-quantum encryption? I really appreciate that question, Rob. I mean, I think part of the reason we are sitting here, feeling so good about the business is because over the last decade, we've invested in a number of things. And, you know, we've missed a couple, hit a few singles, but also hit a few home runs, and that's our continued approach.

Speaker Change: Curious in terms of the major growth trends, where you want to be a leader how should we think about things like quantum computing and post quantum encryption.

Rob: I really appreciate that question, Rob I mean, I think part of the reason we are sitting here feeling so good about the business is because over the last decade, we've invested on a number of things.

Rob: We <unk>.

Rob: I missed a couple of hitting singles, but also hit a few homeruns and thats, our continuing approach as we're trying to be.

Horacio D. Rozanski: We're trying to be... in front of the market. Things that we think a lot about now are the intersection of AI and cyber. NAI and Zero Trust.

Rob: In front of the market.

Rob: So we think a lot about now is the intersection of AI and cyber.

Rob: NII in Zero Trust.

Horacio D. Rozanski: We think a lot about both the edge cloud, edge computing, and how you bring together AI at the edge, which is actually a very significant..., technical challenge. And that's why we have made investments through our venture fund that position us really well for that. That's why we're building unique technology stacks with some of our technology partners that position us really well on that. And then, as you said, I think we already have a budding leadership position in quantum and PQE.

Rob: We think a lot about edge.

Rob: It's cloud based computing and how you bring together AI at the edge, which is actually a very significant.

Rob: Technical challenge.

Rob: That's why we've made the investments through our venture fund that position us really well on that that's why we're building unique technology stacks with some of our technology partners that position us really well on that and then as you said I mean, we I think we already have a bonding leadership position.

Rob: In quantum and <unk>.

Speaker Change: Uh huh.

Speaker Change: I think those are all going to be fields that are going to continue to grow and I believe booz Allen is continuing to build.

Speaker Change: Cause I think our mantra is let's what was from these missions of national importance, let's make sure we can bring.

Speaker Change: Our technology to these mission so let's make sure we can help our clients create solutions that scale beyond the prototype.

Speaker Change: I think.

Speaker Change: This sort of focus on the prototype as the end all be all short changes what our clients ultimately need and that's why we're so focused on scaling.

Speaker Change: Thank you.

Sure.

Horacio D. Rozanski: I think those are all going to be fields that are going to continue to grow, and I believe Booz Allen is continuing to build because I think our mantra is, let's focus on this mission of national importance. Let's make sure we can bring our technology to this mission. So let's make sure we can help our clients create solutions that scale beyond the prototype. I think this sort of focus on the prototype at the end will be all short changes what our clients ultimately need, and that's why we're so focused on scaling. Thank you. Sure. Thank you. Our next question comes from Bert Subin with Stiefel. Your line is open.

Speaker Change: Thank you. Our next question comes from Bert <unk> with Stifel. Your line is open.

Operator: Yeah, thank you, and good morning. Horacio, I just wanted to follow up on some of your AI comments to Mariana's question and just in your prepared remarks. When you hosted your AI event and conference, I guess, around AUSA last year, you were looking for FY 24 sales in the range of, I think, 500 to 700 million. Sounds like you came in around the midpoint of that.

Speaker Change: Yes, Thank you and good morning.

Bert William Subin: You also, however, said in your preliminary marks that you're looking to get to a billion dollars in the next couple of years. So that would imply pretty significant growth. So I guess my question is, what's changing in AI in FY25 and FY26 for you to see that acceleration in growth? Is that a function of awards taking time, or is it a function of shifting internal investment to the contract side? And is that growth more skewed to the DoD Intel opportunity, or has it been more skewed? You know, it's a really good question.

Horacio D. Rozanski: Morning Ross.

Horacio D. Rozanski: Just wanted to follow up to some of your AI comments to Marianna question and just in your prepared remarks.

Speaker Change: So when you hosted your AI and event I guess around <unk> last year, you were looking for FY 'twenty for sales in the range of I think $500 million to $700 million.

Speaker Change: Sounds like it came in around the midpoint of that based on what you've what you noted you also have ever said in your prepared remarks.

Looking to get to $1 billion in the next couple of years, so that would imply pretty significant growth.

Speaker Change: I guess my question is whats changing in AI in FY 'twenty five and six for you to see that acceleration in growth is that a function of awards, taking time or is it a function of shifting internal investment to the contract side.

Speaker Change: And as that grows more skewed to the Dod Intel opportunity or has it been more civil driven.

Horacio D. Rozanski: I think this is where AI is in the cycle in the federal government. I think, you know, there's a cycle of experimentation, there's a cycle of trying things out, then you start to get early success, and then, you know, you go vertical on scaling.

It's a really good question I think this is where AI is in the cycle and the federal government I think we there's a cycle of experimentation. There is a cycle of trying things out and you're starting to get early successes.

Speaker Change: And then you go vertical on scaling and I think we're just at the very beginning of the vertical.

Horacio D. Rozanski: And I think we're just at the very beginning of the vertical scaling phase. The rationale there is, you know, these missions are becoming increasingly complex. We talk a lot about the Pacific and the threats it faces. That set of missions poses a whole new set of challenges to our nation just out of sheer scope. I think about half of the world's surface or something like that is the Indo-Pakong region.

Speaker Change: Scaling phase.

Speaker Change: The rationale there is.

These patients are becoming increasingly complex, we talk a lot about the Pacific under facing threat.

Speaker Change: That set of missions post is a whole new set of challenges coordination just out of sheer scope.

Speaker Change: If you think about it sort of half of the world's surface or something like that it's sustained to pay colm.

Horacio D. Rozanski: And so when you start to look at that, you understand how important it is to actually augment humans through AI. Our clients understand that, and they're coming to us for work, for help, for support as they scale these capabilities. But it is really broad-based. You know, if you'd asked me this question 18 months ago, I would have said it was most prominent in Intel. DoD was starting to go down that path, and civil agencies were really more focused on cloud migration than on AI. I think that has really changed.

Speaker Change: Region.

Speaker Change: And so when you start to look at that you understand how important it is to actually augment humans.

Artificial intelligence, our clients understand that and they are coming to us for for work for help for support as they scale. These capabilities, but it is really broad based.

Speaker Change: If you'd asked me. This question 18 months ago I would have said it was most prominent in Intel.

<unk> was starting to go down that path of the civil agencies, we're really more focused on cloud migration.

Speaker Change: On AI.

Speaker Change: That hasn't really changed I think right now everybody has taken advantage of the data on the cloud in particular to drive AI into their emissions and we're well positioned to help.

Horacio D. Rozanski: I think right now, everybody's taking advantage of data on the cloud, in particular, to drive AI into their missions. And we're well-positioned to help across the board, as I said, and to integrate it into other technologies that are key to that. And I think, for us, part of what's really powerful is while we're highlighting AI a little bit of its own because there's so much interest in it, everything we do is integrated.

Speaker Change: Across the board as I said until we integrated into other technologies that are that are key to that and I think part of it for US part of what's really powerful is why we're all while we're highlighting AI a little bit of its own because there is so much interest on it everything we do is integrated so it's always AI and cloud AI and <unk>.

Horacio D. Rozanski: So it's always AI and cloud, AI and cyber, AI and space, AI and C2. And that's, I think, where the power is going to come from. AI is not a standalone thing that you buy by itself.

Speaker Change: <unk> phase II in situ and Thats, I think where the power is going to come on its Aif is not a standalone thing that you buy by itself.

Speaker Change: Ingredients in accelerating emission need.

Bert William Subin: AI is an ingredient in accelerating emissions. Got it. That makes a lot of sense. Matt, I have a follow-up for you. You're assuming flattish margins in FY25. I guess as you think longer term, you know, putting everything into this from your AI growth, cyber growth, you know, potentially faster growth in the civil sector. What would it take for Booz to go from an 11% margin to 12%? Yeah, thanks. That's a broad hypothetical question.

Got it that makes a lot of sense.

Speaker Change: Matt I have a follow up for you.

Speaker Change: You're assuming flattish margins in FY 'twenty five.

Speaker Change: Yes, as you think longer term, putting everything into this from your AI growth cyber growth potentially faster growth in the civil sector.

Speaker Change: What would it take for boost to go from an 11% margin to a 12% Martin.

Speaker Change: Yes.

Speaker Change: That's a broad hypothetical question first.

Matthew A. Calderone: First, let me start by saying I'm really pleased with our margin profile over the past couple years and where we're guiding. I mean, we've talked about HIDEM, the dynamic, the market, Horacio, and talked about how much the market has changed with AI and other infusions technology in the market. And to be a compounder, right, to generate the kind of consistent organic growth we've generated, you've got to invest ahead of demand. So, you know, remember, in our original investment thesis, we were guiding to mid-10s margins so we've been able to invest at record levels and really transform our business and deliver 11% margins.

Speaker Change: Let me start by saying I'm really pleased with our margin profile over the past couple of years and where we're guiding.

Speaker Change: We've talked about how dynamic the market gracias.

Speaker Change: Talking about how much the market has changed with with AI and other.

Speaker Change: <unk> technology in the market and to be a compound or right to generate the kind of consistent organic growth.

Speaker Change: We've generated you've got to invest ahead of demand so.

Speaker Change: Remember in our original investment thesis, we were guiding to mid teens.

Speaker Change: So that we've been able to invest at record levels, and really transform our business and delivering 11% margins.

Matthew A. Calderone: Over the past couple years, it really speaks volumes about the strength of our business. You know, I think to answer your question, it's really threefold. Can we continue to get scale out of our business? How much do we invest? Or do we want to invest in order to continue to compound?

Speaker Change: Over the past couple of years, you really speaks volumes about the strength of our business I think to answer your question.

Matthew A. Calderone: But the inflection point, you know, probably will be around selling differently, our clients buying. I talked a lot about outcome-based contracting, but it's still in its early stages. We're seeing some experimentation in different parts of the market, and we're experimenting ourselves, but we're nowhere near being able to call that having a material impact on our margins going forward. But I'm sure this will be quite the topic for our next one. Thanks very much, Matt.

Speaker Change: It's really three four can we continue to get scale out of our business how much do we need to invest or do we want to invest in order to continue to compound, but the inflection point and you probably will be around selling differently than our clients buying differently talked a lot about outcome based contracting.

Speaker Change: It's still in its early stages, we are seeing some experimentation in different parts of our market we're experimenting ourselves.

Speaker Change: But we're nowhere near being able to call that as having a material impact on our margins going forward.

Speaker Change: But I'm sure this will be quite the topic for our next investment thesis.

Speaker Change: Thanks, very much Matt.

Speaker Change: Okay.

Speaker Change: Thank you.

Operator: And our next question comes from Seth Seifman with J.P. Morgan. Your line is open. Thanks very much, and good morning.

Speaker Change: And our next question comes from Seth <unk> with Jpmorgan. Your line is open.

Seth: Thanks very much.

Speaker Change: Good morning.

Speaker Change: Good morning.

Seth Michael Seifman: Good morning. I wanted to ask, maybe if you could talk a little bit more about capital deployment in the coming years, probably, you know, maybe a little bit of excess cash on the balance sheet. $750-$800 million of cash after CapEx coming this year. I guess, how do you how do you see the M&A environment right now? Are there deals and evaluations that make sense? And if not, should we expect to see a pickup and share purchases this year from the 400 ish last year? Yeah, thanks.

Good morning, I wanted to ask.

Speaker Change: Maybe if you could talk a little bit more about capital deployment in the coming years probably.

Speaker Change: Maybe a little bit of excess cash on the balance sheet.

Speaker Change: 750 $800 million.

Cash out for Capex coming this year.

Speaker Change: I guess, how do you how do you see the M&A environment right now are there deals a valuation that makes sense.

Speaker Change: And if not should we expect to share a pickup in share repurchases. This year from the 400 ish last year.

Yes.

Matthew A. Calderone: You're right, we're in a good spot that we've been able to hit the top end of our investment thesis almost entirely through organic performance. Leaves a lot of room in the balance. I'll start by saying our capital deployment priorities haven't changed. Strategic M&A is our preference, but our approach hasn't either. We're going to remain patient and disciplined. So we didn't make any acquisitions last

Speaker Change: You're right we're in a good spot.

Speaker Change: That we've been able to hit the top end of our investment thesis almost entirely through organic performance leaves us a lot of room on the balance sheet too.

Speaker Change: To deploy.

Speaker Change: I'll start by saying our capital deployment priorities Havent changed strategic M&A.

Speaker Change: Our preference, but our approach is neither right, we're going to remain patient and disciplined so.

Matthew A. Calderone: We closed on a few transactions, and we are really, really good about our pipeline. There are more assets out in the market, including Interestingly, we're seeing, I think, a disproportionate number of carve-outs this year, which provides some opportunity, but some challenges as well, and I'm really encouraged by what I see. But we're going to stay flexible, and I also appreciate that the board has increased our share of purchase authorization, giving us the flexibility to return value in lots. Okay, okay, excellent.

Didn't make any acquisitions last year, we were close on a few transactions that feel really really good about our pipeline.

Speaker Change: There are more assets out in the market, including some high quality ones.

Speaker Change: Interestingly, we're seeing I.

Speaker Change: I think a disproportionate number of carve outs this year.

Speaker Change: Which you provide some opportunity, but some challenges as well and I'm actually I'm really encouraged by what I see.

Speaker Change: But we're going to stay stay flexible.

Speaker Change: I appreciate that the board has increased our share repurchase authorization, which gives us the flexibility to return value with lots of different ways.

Matthew A. Calderone: And maybe as a follow-up, just, you know, more of a clarification about the outlook for the year, you talked about planning for the strong start and then, you know, maybe a little bit more uncertainty in the back half around the budget, but there's also the, so that would lead you to think, okay, maybe growth is going to be faster in the first half, but then you talk about the way that the comps aligned. So we should be expecting this kind of, you know, 9, 10 ish percent growth through the year, and you see that happening in the back half as well, even with some of the uncertainty that you're thinking about with regard to the budget and the election. Yeah, I think that's roughly in line with what we anticipate. A flatter profile, both in terms of year-on-year growth, percentage, and margins over the course of, great, great. Okay, well, thanks very much.

Speaker Change: Okay, Okay, that's fine and maybe as a follow up just more of a clarification about the outlook for the year you talked about planning for the strong start and then maybe a little bit more uncertainty in the back half around the budget, but there is also the.

Speaker Change: So that would lead you to think okay, maybe growth is going to be faster in the first half, but then you talk about the way that the comps a lot. So we should be expecting that kind of 10 ish percent growth through the year and you see that happening in the back half as well even with some of the uncertainty that you're thinking about with regard to the budget and the election.

Speaker Change: Yes, I think thats, that's roughly in line with what we anticipate a flatter profile both in terms of year over year growth.

Speaker Change: Percentage and margins over the course of the year.

Speaker Change: Great Okay.

Speaker Change: Well, thanks very much.

Seth Michael Seifman: Thank you. Our next question comes from Toby Summer with Truist Securities. Your line is open. Yeah, good morning. This is Jack Wilson speaking on behalf of Toby Summer.

Speaker Change: Thank you. Our next question comes from Tobey Sommer with <unk> Securities. Your line is open.

Speaker Change: Yes. Good morning. This is Jack Wilson on for Tobey Sommer.

Operator: I know you've recently spoken about sort of how the workforce has evolved to be sort of far more technical than, than historically. Can you speak to sort of how the hiring trends are in terms of what percentage of new hires come in with technical skills and what sort of what percent are up-skilled once hired? Why don't I start on this?

Jack Wilson: You've recently spoken about sort of how the workforces evolved to be far more technical than that historically can you speak to sort of how the hiring trends are in terms of what percentage of new hires come in with tactical skills, and what are sort of what percent of upscale ones hired.

Jack Wilson: I think in general, you know, because we have become so much more of a firm that injects technology into missions of national importance, our hiring has shifted to both the mission expertise around those specific missions, like we do in the Pacific, but also a broad-based technical workforce that we both upskill internally and we hire externally. I don't know that we have, you know, every year we increase the percentage of our technical workforce a little bit.

Speaker Change: Why don't I start on this I think in general because we have become so much more of a firm that injects technology.

Speaker Change: Into missions of national importance, our hiring has <unk>.

Speaker Change: <unk> the mission expertise around those specific missions like we do in the Pacific, but also a broad based technical workforce that we both upskill internally and externally I don't know that we have every year we increase.

The percentage of oil.

Speaker Change: Our technical workforce, a little bit I think.

Jack Wilson: I think the good, important trend is our attrition is down significantly year over year. We attribute that to I think the market is a little less frothy than it was a couple of years ago, but, frankly, more importantly, we have done a lot of investing and a lot of work internally on binding people to our culture, giving them internal opportunities, and training our workforce. We built an AI-aware course for a couple of years to train 10,000 people. It took us, whatever, a couple of quarters to do it, or their magnitude.

Speaker Change: Good important trends is our attrition is down significantly year over year, we attribute that to I think the market is a little less frothy than it was a couple of years ago, but frankly more importantly, we have done a lot of investing in a lot of work internally on binding people to our culture of giving them internal opportunity.

Speaker Change: These on training our workforce, we built in AI, where for US we thought it would take US a couple of years to strengthen thousands people. It took us whatever a couple of quarters to do it or their magnitude.

Horacio D. Rozanski: So we're feeling very, very good about our ability to retain, to train, and to upscale our workforce. And I think what's also underneath that is this focus on missions of national importance is really allowing us to bring in top talent from across the country, from across all industries that want to work on this key national requirement. Thank you for that color there.

Speaker Change: So so we're feeling very very good about our ability to retain to train and to upscale our workforce and I think what's also underneath that is is this focus on missions of national importance are really allowing us to bring in.

Speaker Change: Absolute top talent from across the country from across all industries that want to work on this.

Speaker Change: Key national requirements.

Speaker Change: Thank you for that color there and then maybe as a follow up are there any other regions outside of the Indo pay com region that youre seeing sort of especially high levels of activity.

Jack Wilson: And then maybe as a follow-up question, are there any other regions outside of the Indo-PACOM region that you're seeing sort of especially high levels of activity? Um, well, you know, the world is active just about everywhere. We, as I've spoken about before, have significant press presence in Europe and in support of our nations working there on EUCOM and Ukraine. We have a presence in CENTCOM. We have a very significant and growing presence in INDOPACOM.

Speaker Change: Well.

Speaker Change: The World is.

Speaker Change: It's right now active just about everywhere, we are as I've spoken to before perhaps significant presses.

Speaker Change: In Europe and in support of our nations working there around new calm and Ukraine.

Speaker Change: We have a presence in centcom, we have a very significant.

Speaker Change: And growing presence in it'll pay comp.

Jack Wilson: But also, even outside of DOD, the nation is making significant investments in public health, and Booz Allen is right in the middle of that. There's a lot of modernization of technical infrastructure really across the entirety of the federal government, and we are extremely active in that and differentiated, as I said. Thank you very much.

Speaker Change: But also even outside of that if you look at that.

Speaker Change: The nation is making significant investments in public health.

Speaker Change: And <unk> is right in the middle of that.

Speaker Change: There is a lot of militarization of technical infrastructure really across the entirety of the federal government and we are extremely active on that and differentiate it a site. So you said before.

Speaker Change: Thank you very much.

Horacio D. Rozanski: Thank you. And our next question comes from Cai Von Rumohr. T.D.

Speaker Change: Thank you and our next question comes from Cai von rumor with TD Cowen Your line is open.

Operator: Cowan, your line is open. Yes, thanks so much. So, Horacio, one for you. If I think about your industry 10 to 15 years ago, it was kind of focused on GWAT, you know, a threat that really was not as significant as what we're seeing today with China, with digital transformation, with AI, and the folks at Booz were basically experts, but basically they were more supplementing what the customer did.

Speaker Change: Yes, thanks, so much so horacia one for you.

Speaker Change: I think about your industry 10 to 15 years ago. It was kind of focused on G want.

Speaker Change: Threat that really was not as significant as what we're seeing today with China.

Speaker Change: With digital transformation.

Speaker Change: With.

Speaker Change: And we're thinking about the folks from from Booz basically we're experts, but basically they were more supplementing what the customer did as opposed to today, where it seems like the technology level of expertise that you are bringing and others.

Operator: As opposed to today, where it seems like the level of expertise that you're bringing and others is higher. And if I look around, your numbers have been great, but your peers are also putting up some pretty good numbers.

Speaker Change: Is higher.

Speaker Change: I look around your numbers have been great, but your peers are also putting up some pretty good numbers part of that obviously is the strong flow through.

Speaker Change: That's one.

Cai von Rumohr: Part of that, obviously, is the strong flow through of the hefty FY23 budget. But are we moving to a period where you think your industry and Booz in particular can kind of de-link from, you know, kind of looking at what's the O&M budget, what's the R&D budget, what's the Intel budget, because you're taking a bigger chunk of that budget, and we're looking at maybe some secular upward shift in your total sector growth?

Speaker Change: <unk> hundred 23 budgets, but are we moving to a period.

Speaker Change: Where you think your industry in Booz and specific and kind of key link from kind of looking at what's the O&M budget, what's the R&D budget, what's the Intel budget, because youre, taking a bigger chunk of that budget and we're looking at maybe some secular upward shift in total.

Speaker Change: Total sector's growth.

Cai von Rumohr: You know, I, let me speak about us a little bit. I think, you know, if you look at it broadly, and I think you were making this point really well, Cai, if you go back, you know, when I started in this business, the vast majority of innovation was funded, really, by the government. You go back 50 years, right?

Speaker Change: Yeah.

Speaker Change: Let me sneak up on us a little bit I think if you look at it broadly and I think you were making this point really well.

Speaker Change: If you go back when I started in this business the vast majority of innovation.

Speaker Change: Was funded really in the government and you go back 50 years Friday the space program.

Speaker Change: <unk> was inventing things.

Speaker Change: Probably the private sector with an adult if you go back to the birth of the Internet right I mean that was a DARPA program.

Horacio D. Rozanski: I mean, the space program was inventing things that the private sector would then adopt. If you go back to the birth of the internet, right, I mean, that was a DARPA program that the private sector adopted. If you look at the way things work now, the flow of innovation is really the other way. The funding for innovation that the private sector can provide now outspends the government.

Speaker Change: That.

Speaker Change: The private sector adopted if you look at the way things work now.

Speaker Change: LOE of innovation is really the other direction.

The funding for innovation that the private sector can provide now the outspend for the government.

Horacio D. Rozanski: I think that's an American strength. I think that is actually fundamentally a good thing. And so in that context... You know, I think your question makes a lot of logical sense. As the dual-use technologies continue to grow, I think Booz Allen is particularly well positioned because we started early, because we have the right partnerships, because of the talent base that you described, to take advantage of the secular trends over the years. I think overall that the market has to be linked to the budget by definition.

Speaker Change: Every year and I think that's a that's an American strength I think that is actually fundamentally a good thing and so in that context.

Speaker Change: I think your question makes a lot of logical sense do I'll use technologies continues to grow I think booz Allen is particularly well positioned because we started early because we have the right partnerships because of the talent base that you described.

Speaker Change: Take advantage of these secular trends.

Speaker Change: Trends.

Speaker Change: Yes, I think overall the market has to be linked to the budget by by definition.

Horacio D. Rozanski: But, as you well know, not every part of the budget grows at the same speed, and not every part of the market grows at the same speed. And I think key to our success is not just being to take share in the places where we are but also to be positioned against the fastest areas of growth in the market. And to the extent that we can continue to do that. You know, obviously, on any given year, this is an election year.

Speaker Change: As you well know not every part of the budget growth at the same speed not every part of the market grows at this speed and I think key to our success is not just being to take share in the places where we are but also to be position against the fastest areas of growth in the market and to the extent that we can continue to do that.

<unk>.

Speaker Change: Obviously in any given year. This is an election year, we need to be cognizant of potential turbulence, but in the medium and long term.

Cai von Rumohr: We need to be cognizant of potential turbulence, but in the medium and long term, we're very optimistic. Terrific. Thanks a lot.

Speaker Change: We're very optimistic.

Speaker Change: Terrific. Thanks, a lot.

Speaker Change: Q.

Operator: Thank you. Thank you. And our next question comes from Sheila Kahyaoglu with Jeffries. Your line is open.

Speaker Change: Thank you and our next question comes from Sheila <unk> with Jefferies. Your line is open.

Sheila Karin Kahyaoglu: Good morning, Horacio and Matt, and congratulations to Ralph. I wanted to first ask you about your health business. You said it doubled up to $2 billion in some work with the VA. What type of runway do you see in health going forward, given the technology and implementation you have? And are there re-compete opportunities from other competitors with VA and PACDAC? So, you know, our health business is an extraordinary business that has been a true success. But the story, if you go back 10, 15, 20 years, it really was not a significant contributor to the portfolio.

Sheila: Good morning, Raphael, Matt and congratulations on a really.

Speaker Change: Great succession.

Speaker Change: In terms of.

Speaker Change: I wanted to first ask about your health business, you said it doubled to $2 billion and some work with the VA.

Speaker Change: Type of runway do you see them going forward given the technology.

And you have and are there recompete opportunities are.

Speaker Change: Are there competitors with VA impact back.

Speaker Change: So our health business is an extraordinary business that has it's a true success.

Speaker Change: Story, if you go back 10, 15 20 years.

Speaker Change: It really was not a significant contributor to the portfolio and now it's a real source of Pride, you know, reaching $2 billion doubling in five years, and I'm really demonstrating that booz Allen proposition of bringing technology to these national priorities emissions.

Horacio D. Rozanski: And now it's a real source of pride, you know, reaching $2 billion, doubling in 5 years, and really demonstrating the Booz Allen proposition of bringing technology to these national priority missions. I think as we look forward into the coming years, the acceleration of the digital transformation of our entire public health infrastructure, from the support of veterans in the VA to really the transmission of information across this very complex. The Health System in our country, to prepare and to be better prepared for, you know, the next health emergency if it arises, when it arises.

Speaker Change: I think as we look forward into the coming years, the acceleration of the digital transformation of our entire public health infrastructure from the support of veterans in the VA. So really the transmission of information across these very complex.

Speaker Change: <unk> health system in our country to do the preparation and to be better prepared for the next health emergency if it arises when it arises those are the emissions that we are centered around that is the work that we're doing and we expect that work overall frequency.

Horacio D. Rozanski: Those are the missions that we are centered around. That is the work that we're doing, and we expect that work overall to continue to grow. And it's competitively intense because it is very important work.

Speaker Change: And to grow.

Speaker Change: And it is competitively intense because it is very important work. It is really good work.

Horacio D. Rozanski: It is really good work, and it's work we excel at. As I said earlier with Mariana's questions, there's a concentration of re-competes in that business this year. It's part of the calendar.

Speaker Change: And it's work we excel.

Speaker Change: Uh huh.

Speaker Change: Said earlier with our analyst questions.

Speaker Change: There is a concentration of re competes in that business this year.

Speaker Change: And part of the calendar it's in part the fact that actually some of these long programs.

Horacio D. Rozanski: It's in part the fact that actually some of these, the Long Program. We are doing so much work, and it's such good work, that we're actually going through the ceiling before the end of the period of performance, and so they're getting re-competed a little early. You know, I think the quality of our work, the new insights and the new technology we're bringing to all of these re-competes, and here's yet another place where, you know, it's almost like we all divide the work between new work and re-compete, and that makes sense, as sort of a characterization, but so much because the government is bundling procurement. These re-competes are both re-competes and new work all at the same time.

Speaker Change: We are doing so much work on it so good work that we're actually going through the ceiling before the end of the period of performance and so theyre getting refill period.

Speaker Change: A little early.

Speaker Change: I think the quality of our work.

Speaker Change: New insights into the new technology, we're bringing to it.

Speaker Change: Our position as well for all of US re competes and here's another place where you know.

Speaker Change: It's almost like we will divide the work between new work and re competes and that makes sense.

Speaker Change: Sort of I'll say characterization.

Not so much because the government is bundling procurements.

Speaker Change: These re competes are both recompete and new work all at the same time, there is increasing scope. There is increase in sealing theres, new opportunity and you've followed us for a long time I think you know one of the things that we're really good at.

Horacio D. Rozanski: There's an increase in scope, there's an increase in ceiling, there's new opportunities, and you've followed us for a long time. I think, you know, one of the things that we're really good at is when we win work, whether it's a re-compete with expanded scope, whether it's a new program, we are uniquely good at tactically selling into that so that a billion dollars of ceiling actually becomes a billion dollars of work over the life of the contract because we know how to find opportunities and make sure that our clients get full access. Okay, thank you for that, Horacio.

Speaker Change: Is when we win work, whether it's a recompete with expanded scope, whether it's a new program. We are uniquely without tactically sell into that so that a billion dollar of sealy actually becomes a $1 billion of work over the life of the contract.

Speaker Change: Because we know how to find the opportunities and make sure that our clients get full axis.

Speaker Change: Okay.

Thank you for that and then maybe just in terms of the other half of that portfolio can you talk about some of the drivers of outgrowth. Darren can you do you expect to see double digits.

Speaker Change: Bob.

Sheila Karin Kahyaoglu: And then maybe just in terms of the other half of the portfolio in civil, can you talk about some of the drivers of growth there? And can you do expect to see double digits in fiscal 25? You know, this is a, we're actually excited about the entire portfolio, and say, well, I'm glad you asked that question, because we talk so much about our health business, because it's such a success story, but the rest of the portfolio, you know, our working treasury continues to grow, we're doing, again, exciting work, whether it's fraud detection, whether it's bringing AI to some of these missions for efficiency and effectiveness, whether it is the underlying digital transformation of some of these agencies, and certainly the cyber protection of this entire .gov domain.

Speaker Change:

This is a we're actually excited about the entire portfolio.

Speaker Change: Well I'm glad you asked that question because we talk so much about our health business, because it's such a success story, but the rest of the portfolio and are working treasury continues to grow.

Speaker Change: We're doing again exciting work, whether it's fraud detection, whether it's bringing AI to some of these missions for efficiency and effectiveness whether it is the underlying digital transformation of some of these agencies and certainly the cyber protection of this entire dot Gov domain are these are areas, where booz Allen has leading positions in itself.

Sheila Karin Kahyaoglu: These are areas where Booz Allen has leading positions and excels. And the other part of our portfolio that is also exciting and growing is our law enforcement. With the federal agencies, we are seeing opportunity there. We've been investing in some of those clients for a while, and these investments are now taking hold. And we expect to see good growth there. And Sheila, just to go outside health, I mean, if you look at the entirety of the portfolio, you know, I would say, and I think you agree with this, our growth is probably as broad-based as it ever has been. I mean, even in our Intel business, the fact that they were able to grow 5% this year with the loss of F2 speaks to the underlying strength in the business.

Speaker Change: And the other part of our portfolio that is also exciting and growing you saw law enforcement.

Speaker Change: Portfolio with the federal agencies are we are seeing opportunity there we've been investing in some of those clients for a while and these investments are now taking hold and we expect to see good growth there too.

Julia: Julia just to go outside health I think if you look at the entirety of the portfolio I would say no actually I think if you agree with this our growth is probably as broad based as it ever has been I mean, even in our Intel business and the fact that they were able to grow 5%. This year with the loss in half two this speaks to the underlying strength in in the busy.

Speaker Change: So we're an interesting spot having just gone through with Christine and the review of all of our sectors in the accounts.

Matthew A. Calderone: So we're an interesting spot, having just gone through with Christine, you know, the review of all of our sectors and the accounts that underlie them. There's just a lot of optimism, and it's very broad-based. That's a really good point.

Underlie them, there's just a lot of optimism and it's very broad based that's a really good point I mean, our defense business grew 20%. This year I think the last time that our defense business grew 20%, you'll see maybe a fifth of its size.

Horacio D. Rozanski: I mean, our defense business grew 20% this year. But I think the last time that our defense business grew 20%, it was maybe a fifth of its size. So, it grew this year by the entire size that it was that year, so, you know, we're for good reason feeling very good, and, you know, as I continue to say, we're cognizant of the fact that this is an election year, that the budget, the situation going into the next government fiscal year is something we all need to keep a close eye on, and we are, and that's why, you know, we're Thank you. Thank you. Thank you. And our last question comes from Louis DiPalma with William Blair. Your line is open. Horacio, Matt, and Nathan, good morning.

Speaker Change: So it grew this year. These are sites that it was that year.

Speaker Change: So we're feeling.

Speaker Change: Clearly very good and so I continue to say, we're cognizant of the fact that this is an election year that the budget.

Situation going into the next government fiscal year is something we all need to keep a close eye on and we are and we're taking advantage of the momentum that we have.

Speaker Change: Congratulations thank you.

Speaker Change: Thank you and our last question comes from Louie Dipalma with William Blair. Your line is open.

Speaker Change #100: Yes, Matt and Nathan good morning.

Speaker Change #101: Hey, good morning, Hey, Louie.

Operator: Hey, good morning. Horacio, in your prepared remarks, when you discussed your outsized role in Indo-PACOM and then on LinkedIn last month, you highlighted your recent trip to Okinawa. Were you alluding to your role with the JADC2 development and your connected battlefield platform? And in February, Deputy Secretary of Defense Kathleen Hicks was at an AI symposium, and she indicated that for the first time, the DoD has attained a minimum viable level for JADC2 to counter China in Indo-PACOM. And I am under the impression that you're playing a major role there. So is that true?

Speaker Change #102: Horacio in your prepared remarks.

Speaker Change #103: When you discussed your outsized role in Indo pay Com and then on Linkedin last month you highlighted your recent trip to Okinawa were you alluding to your role with the Gen Z to development and you're connected battlefield platform and.

Speaker Change #104: In February the Deputy Secretary of Defense Kathleen Hicks. She was then AI symposium and she indicated that for the first time the D. O D has attained a minimum.

<unk> level four for dead Sea to counter China, and India pay comment I am under the impression that you are playing a major role there so.

Speaker Change #105: Is that true and are you deeply involved there.

Michael Louie D DiPalma: And are you deeply involved there? Louis, what I can say is that our growth in IndoPay.com is broad-based. As I've said on these calls, I spent time in Taiwan, I spent time in Japan, I spent time, a fair amount of time in Hawaii.

Speaker Change #106: Although what I can say is that our growth in AR.

Speaker Change #107: And they'll pay comes as broad base of some of these calls I spent time if they want I spent time in Japan I spent time, a fair amount of time in Hawaii and the conversations with senior clients from my perspective are all about speed.

Horacio D. Rozanski: And the conversations with senior clients, from my perspective, are all about speed. How can we accelerate bringing technology to the theater in support of the mission, C2? Portfolio is obviously an important area of focus, a particular area of focus, the fact that you have to communicate across all these platforms, across all of these distances in what could be sort of a challenged electromagnetic spectrum.

Speaker Change #107: How can we accelerate bringing technology to the theater in support of the mission. The seat to portfolio is obviously, an important area of focus that particular area of focus. The fact that you have to communicate across all these platforms across all of these distances in what could be sort of challenge.

Speaker Change #107: <unk> electromagnetic spectrum are those are areas that we're thinking very deeply about.

Horacio D. Rozanski: Those are areas that we're thinking very deeply about, and we're very involved in making investments. And so those are the kinds of things that we think about, and more to come.

Speaker Change #107: And we're very.

Speaker Change #107: Very involved in and making investments and so those are the kinds of things that we think about and more to come.

Michael Louie D DiPalma: And for Matt, what would you attribute your hiring strength to? Have you been making tech investments to improve your recruiting and onboarding processes? And has anything structurally changed that?

Great.

Speaker Change #108: Matt what would you attribute your hiring strength to have you been making tech investments to improve your recruiting and Onboarding and has anything structurally changed that.

Matthew A. Calderone: allowing you to grow and improve employee utilization above your historical pace, and has the generational excitement about AI been positive from a recruiting standpoint? The answer to your question broadly is yes, Louie. We've made a number of improvements, including using technology to really enhance and expedite the entire portion of the recruiting cycle. But remember, about a third of our employees come from referrals, which just gives you a sense of the power of the employee value proposition.

Speaker Change #109: Allowing you to grow and improve employee utilization above your historical pace.

Speaker Change #110: As the generational like AI excitement and positive from a recruiting standpoint.

Michael Louie D DiPalma: Oh, Yeah. The answer to your question broadly is yes Louie.

Made a number of improvements including using technology.

Michael Louie D DiPalma: To really.

Michael Louie D DiPalma: Enhanced and expedite the entire portion of the recruiting cycle, but remember about a third of our employees come from referrals.

Michael Louie D DiPalma: Just to give you a sense of the power of the employee value proposition I think people are joining booz Allen not just because we're better able to find them and process them joining bead on because they want to be here, we're doing exciting work and we're offering them careers.

Matthew A. Calderone: I think people are joining Booz Allen, not just because we're better able to find them and process them; they're joining Booz Allen because they want to be here. We're doing exciting work, and we're offering them careers and pathways, particularly for our technical talent, as well as our mission-focused talent, who really want to have an impact that they find meaningful. The only thing I'd challenge you on a bit is that we're not seeing utilization above historic levels.

Michael Louie D DiPalma: And in pathways, particularly for our technical talent as well as our mission focused talent that really want to have an impact.

Michael Louie D DiPalma: That they find meaningful the only thing.

John: John you want a bit is we're not seeing utilization above historic levels I think our utilization is.

John: It's fine.

John: But it's it's where it should be.

Matthew A. Calderone: I think our utilization is fine, but it's where it should be. So that's not, that's not, that hasn't been a driver of growth. It really has been. You know, obviously, we've got to work to put people on, and we're doing a better job of attracting and retaining the kind of talent that we want. Yeah, I mean, I'll add to that simply by saying, you know, we're saying internally that we're 110 years young.

John: So that's not that hasn't been a driver of growth. It really has been you know obviously, we've got to work.

John: To put people on and we're doing a better job of.

John: Attracting and retaining the talent that we want.

John: Yes.

After that simply by saying, we're saying internally were 110 years young.

Horacio D. Rozanski: And we use that language specifically because it's a really vibrant environment inside Booz Allen right now. Our people feel it. People that are looking for a job are attracted to it.

And we use that language specifically because it's it's a really vibrant environment inside Booz Allen right now are people feel it people that are looking for a job are attracted to it.

Horacio D. Rozanski: And the work that we're doing, the clients we're doing it for, and the way in which we work with one another, I think are all talent magnets. And that's what gives us, you know, optimism for the future in an uncertain environment. Great. Thanks, everyone, and happy Memorial Day weekend. Thank you.

John: And the work that we're doing the clients, we're doing it for and the way in which we work with one another I think are all talent magnets and and Thats, what gives us optimism for the future in an uncertain environment.

Speaker Change #113: Great Thanks, everyone and happy Memorial Day weekend.

Speaker Change #114: Yeah, you as well for as well.

Speaker Change #115: Thank you at.

Speaker Change #116: At this time I'd like to turn the call back over to Raphael for any closing remarks.

Horacio D. Rozanski: Thank you. Thank you all for your questions and for joining us this morning. As I was just saying, at Booz Allen, we are so proud of our history and equally excited about the future. We are working in our virtuous circle where our strategy drives our performance, performance drives investment, which creates opportunities, and opportunities simply attract great talent that begins the cycle all over again. Just this week, we held our Booz Allen Excellence Award, which is our internal effort to both highlight and celebrate the talent that we have and the incredible work that they do, and this was an opportunity to hear some amazing stories of how we're supporting our veterans.

Raphael: Thank you. Thank you all for your questions and for joining US this morning.

Speaker Change #118: Just saying that Booz Allen, we are so proud of our history.

Speaker Change #118: And equally excited about the future.

Speaker Change #118: We are working in our virtuous circle, where our strategy drives our performance poor foremost drives investment, which creates opportunity and opportunity simply attract great talent that begin to cycle.

Speaker Change #118: All over again.

Speaker Change #118: Just this week, we held our Booz Allen Excellence Awards.

Speaker Change #118: Which is our internal.

Speaker Change #118: For it to both highlight and celebrate the talent that we have and the incredible work that they do and this was an opportunity to hear some amazing stories.

Speaker Change #118: How we're supporting our veterans, our helping our local communities.

Horacio D. Rozanski: Our help in the local communities and our closing a major national security vulnerability. We had a chance to reflect on how we helped the country get through a global pandemic and how we're helping the country prepare for any future health emergency. For 110 years, Booz Allen has always supported our clients and our nations, and we highlight the fact that we do it with excellence.

Speaker Change #118: Our closing major National security vulnerabilities are efforts to protect American troops and to stop cyber attacks.

Speaker Change #118: We have a chance to reflect on how we help the country get through a global pandemic and how we're helping the country prepare for any future health emergency.

Speaker Change #119: 410 years 110 years Booz Allen has always supported our clients.

Speaker Change #119: And our nation's and we highlight the fact that we do it with excellence.

Speaker Change #119: It's not just what we do.

Horacio D. Rozanski: It's not just what we do. This is who we are, and every day the people of this company continue to deliver excellence. We really do have the most amazing team, and I am just so proud to work with them.

Speaker Change #119: It's who we are.

Speaker Change #119: And everyday that people of this company continue to deliver excellence.

Speaker Change #119: You'll have the most amazing team and I am just so proud to work with them.

Horacio D. Rozanski: Thank you, Booz Allen, if you're listening, for all you do, and thank you all again for joining us this morning. Have a great day. Thank you for your participation. This does conclude the program and you may now disconnect. Everyone have a great day. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

Speaker Change #120: Thank you Booz Allen if you are listening for all you do and thank you all again for joining US. This morning have a great day.

Speaker Change #121: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

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