Booz Allen Hamilton Holding Corporation

Good morning. Thank you for standing by, and welcome to Booz Allen Hamilton's earnings call covering fourth quarter and full year results for fiscal year 2021. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for questions. I'd now like to turn the call over to Mr. Ruben Day.

Thank you. Good morning, and thank you for joining us for Booz Allen's fourth quarter and full fiscal year 2021 earnings announcements. We hope you've had an opportunity to read the press release that we issued earlier this morning. We have also provided presentation slides on our website and are now on slide two. I'm Reuben Day, Head of Investor Relations, and with me to talk about our business and financial results are Horacio Rozanski, our President and Chief Executive Officer, and Lloyd Howell, Executive Vice President, Chief Financial Officer, and Treasurer. As shown on the disclaimer on slide three, Please keep in mind that some of the items we will discuss this morning will include statements that may be considered forward-looking and therefore are subject to known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, general economic conditions, the availability of government funding for our company services, and other factors discussed in today's earnings release and set forth under the forward-looking statements disclaimer included in our fourth quarter fiscal year 2021 earnings release and in our SEC filings. We caution you not to place undue reliance on any forward-looking statements that we may make today and remind you that we assume no obligation to update or revise the information discussed on this call. During today's call, we will also discuss some non-GAAP financial measures and other metrics which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our fourth quarter fiscal year 2021 slides. It is now my pleasure to turn the call over to our CEO, Horacio Roszanski. We are now on slide five.

Horacio Roszanski Thank you, Ruben. And good morning, everyone. Thanks for joining the call. Lloyd and I are proud to announce Booz Allen's results for fiscal year 2021 this morning, another stellar performance by the people of our firm. The past year was unlike any other in this company's 107-year history. That simple fact, and all the complexity it sums up, makes the results we are reporting this morning all the more impressive. But before diving into our latest results and our outlook for the current year, I want to highlight that the fiscal year end on March 31st also marked the close of the three-year period covered in our investment thesis. When we first shared our thesis in June of 2018, we committed to 50% growth in adjusted diluted earnings per share over three years. We said that growth would be driven by our unique position in the market and the combination of industry-leading organic revenue growth, adjusted EBITDA margin expansion, and robust capital deployment. With our fiscal year 2021 results now final, Booz Allen has significantly exceeded our three-year financial objectives. ADEPS nearly doubled over the period. to $3.90 in fiscal year 2021. Average annual revenue growth was above the midpoint of the 6% to 9% range we originally provided. Adjusted EBITDA margin was about 10% in each of the three years. And we deployed $1.3 billion in capital, the majority of which was achieved through increased dividends and a robust share repurchase program. During the three-year period, we navigated through significant budget uncertainty, including the longest government shutdown we've ever experienced, a turbulent presidential transition period, and a once-in-a-century pandemic. And throughout, we continued to invest in our people, especially when we set aside $100 million in response to the pandemic All the while, we also continued to invest in our key technologies and develop elements of our option value portfolio. So the story of the last three years is certainly about outstanding financial performance. But more importantly, as we look to the future, it is the basis for our optimistic outlook on the business. Over the last decade, we further differentiated Booz Allen's brand and market position, to the point that today, federal and commercial clients rely on us for advanced technology solutions that deliver both speed and mission scale. And our unique combination of consulting expertise, mission knowledge, innovation, and technology serves as a strategic accelerator for both our firm and our clients. I've said many times, Booz Allen learns and evolves continuously. Our next strategy and long-term financial outlook, which we plan to share with you in the fall, will build on Vision 2020's growth and transformation. We are very comfortable with our direction of travel as we anticipate the opportunities of the next decade. The most recent example of our confidence in our strategic direction is our agreement to acquire Liberty IT Solutions, LLC. As we discussed when we announced it on May 4th, this acquisition is directly on strategy. Liberty is an exceptional company with highly skilled talent, trusted client relationships, closeness to mission, a solid growth trajectory, and digital transformation capabilities that augment Booz Allen's extensive set of offerings. The transaction is expected to close in this quarter. subject to customary closing conditions. And we look forward to officially welcoming the Liberty team to the Booz Allen family. Let's turn now to the fourth quarter and the full fiscal year financial results released this morning. Lloyd and I are proud of the team's performance in an unprecedented year. On all metrics, we have met or exceeded the updated guidance we provided at the end of January. For the full year, organic revenue growth was strong, albeit slower than recent years due to the pandemic and some delays in funding and awards after the election. We also delivered excellent bottom line results. Full year earnings, profit margins, and cash flow are all ahead of expectations. And as the market began to stabilize post-transition, our team did a great job in capturing opportunities driving a record book to build in the fourth quarter and year end backlog of $24 billion. Underlying demand for our services and solutions remains robust, with our defense and civil businesses delivering excellent organic growth in fiscal year 2021, while intelligence and global commercial continue to reshape their portfolios. Lloyd will go into greater depth about market dynamics in a few minutes. Next, I am pleased to report that the Department of Justice has closed the criminal investigation that we first disclosed in June 2017. The civil DOJ and SEC investigations remain pending, and we continue to cooperate with the government to bring those matters to an appropriate resolution. Let's shift now to how we are thinking about the business in the year ahead. As we open fiscal year 2022, we are very focused on a set of near and midterm priorities. First and foremost, to fully benefit from our strong backlog and demand pipeline, we need to accelerate our recruiting efforts. Second, we must capitalize on the reshaped portfolios in intelligence and commercial to drive growth in both businesses. Third, we will carefully manage the transition to a post-COVID environment, by investing in our people and the advanced capabilities we need for the future. Fourth, having launched our next generation financial system on April 1st, we are making strong progress and will keep focused on a seamless implementation. And fifth, upon close of the Liberty acquisition, we will work closely together on a smooth and successful integration. As we look further out, We're also focused on positioning for growth beyond the current fiscal year. Our overriding goal is to accelerate into the next wave of changes in our market. From monetizing the option value portfolio, to investing in new areas like low-code, 5G, AI, or quantum, to finalizing our strategic review. Booz Allen is committed to being a leader in ensuring our clients can scale new technologies into their missions faster than ever. Turning now specifically to our fiscal year 2022 outlook, Lloyd will walk you through the guidance in a few minutes, but I will note that the growth pattern will be different from recent years. This is due to a number of factors from productivity and PTO trends to the Liberty acquisition and the timing of headcount gains. We expect these factors together to produce a revenue profile with low single-digit growth in the first half, followed by significant acceleration in the second half. We plan to the full year, and as our guidance indicates, we expect another year of significant revenue growth in FY22. Continued excellence in operational performance is also expected to produce strong EBITDA growth, continued cash generation, and strategic capital deployment. So to sum up, I am excited and optimistic about the coming year and beyond. Our clients have clear priorities and the ability to marshal resources towards them. We have an exceptional team, an exceptional team tested and successful through good times and challenging ones. Our balance sheet is strong. our unwavering commitment to people over the past year has bolstered our already strong brand in the market for talent. And all of us are committed to and focused on serving clients with excellence and living our purpose and our values. So while we may still see some choppiness, and we have work to do on hiring in the coming months, I have tremendous confidence in our team's ability to deliver growth in the near and the long term. And with that, I'll turn the call over to Lloyd for the full financial results and the outlook for fiscal year 2022.