Booz Allen Hamilton (NYSE:BAH) delivered robust results in the second quarter of fiscal year 2024, with total revenue surging 16% to approximately $2.7 billion. The company's organic revenue also saw a significant growth of 14.8%, contributing to a record backlog of $35 billion. The firm's VoLT (Velocity, Leadership, and Technology) growth strategy has been instrumental in this success, facilitating their response to emerging technologies such as AI, cyber, 5G, and quantum. Booz Allen has increased its top- and bottom-line guidance for fiscal year 2024 and reiterated its adjusted EBITDA target of $1.2 billion to $1.3 billion by fiscal year 2025.
Key takeaways from the call include:
- The company's Defense business was a key driver of growth, with revenue up approximately 24% YoY.
- Booz Allen's bookings for the quarter totaled approximately $6.4 billion, with a book-to-bill ratio of 2.41 times.
- The company's headcount increased to over 33,000 people, with client staff headcount up 11.2% YoY.
- The company returned approximately $143 million of capital to shareholders during the quarter.
- Booz Allen has raised its revenue growth guidance for fiscal year 2024 to 11-14%, with adjusted EBITDA dollar growth of 10-13%.
During the earnings call, Booz Allen executives expressed confidence in the company's growth momentum, driven by increased demand from the business sector and the passing of the budget last December. The company is heavily investing in AI and expects revenue utilization to rise in this area. The bundling of AI into large procurements is also driving success.
The company's Defense business is experiencing significant growth across all segments. Booz Allen is targeting an organic growth of 10-15% for the year and is striving to enhance efficiency on the corporate side to invest in business growth.
Regarding capital deployment plans, the executives stated that strategic M&A remains a priority despite forecasting lower capital deployment. They revealed a pipeline of small- to mid-sized acquisitions and openness to stock buybacks.
The executives also addressed the potential impact of a government shutdown, stating that they are well-prepared for any volatility. They estimated that a previous shutdown cost them $0.02 to $0.03 at the bottom line, but this time they expect it to be 3 to 4 times that amount. Despite this, the company raised its top-line, adjusted EBITDA, and EPS guidance.
Booz Allen Hamilton's annual innovation publication, Velocity, focusing on artificial intelligence, was also mentioned during the call.
InvestingPro Insights
Drawing from real-time data from InvestingPro, Booz Allen Hamilton (BAH) currently has an adjusted market cap of $15.32 billion and a P/E ratio of 52.64. The company's revenue for Q1 2024 stands at $9663.8 million, marking a growth of 12.05% from the last twelve months. The company's gross profit for the same period is $2235.15 million, with a profit margin of 23.13%.
InvestingPro Tips reveal a mixed picture for BAH. On one hand, the company has high earnings quality, with free cash flow exceeding net income, and has raised its dividend for 7 consecutive years. On the other hand, there is a declining trend in earnings per share, and 4 analysts have revised their earnings downwards for the upcoming period. Despite trading at a high earnings multiple, BAH generally trades with low price volatility and stockholders receive high returns on book equity.
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