Booz Allen Hamilton Holding Corporation

Good morning, and thank you for standing by. Welcome to the Booz Allen Hamilton's earnings call covering second quarter fiscal year 2023 results. At this time, all participants are in listen-only mode. Later, there will be an opportunity for questions. I would now like to turn the call over to Mr. Nathan Rutledge.

Thank you, operator. Good morning, and thank you for joining us for Booz Allen's second quarter fiscal year 2023 earnings call. 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. With me today to talk about our business and financial results are Horacio Rozanski, our President and Chief Executive Officer, and Matt Calderon, our Executive Vice President and Chief Financial Officer. 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 from forecasted results discussed in our filings with the SEC 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 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 results, or otherwise. 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 second quarter fiscal year 2023 earnings release and slides. It is now my pleasure to turn the call over to our CEO and President Horatio Rozanski. We are now on slide four. Horatio Rozanski Thank you, Nathan.

And good morning, everyone. Thanks for joining the call. Before diving into the financial results this morning, I would like to begin by acknowledging the seamless transition of our Chief Financial Officer role, from Lloyd Howell to Matt Calderon, two outstanding professionals with great track records at Booz Allen. As we announced last month, Lloyd Howell is retiring on December 31st. I am grateful for Lloyd's tremendous contributions over his 34-year career with Booz Allen, and especially his last six years as CFO. Lloyd greatly advanced our relationship with the investor community. Under his leadership, Muzalan learned to define and communicate long-term investment parameters and articulate our position as an organic growth leader. I will miss Lloyd's voice in our internal discussions and these earnings calls. I know he will go on to do amazing things in the future. Our new CFO, Matt Calderon, stepped into the role on October 1st. Matt has been with Booz Allen for 20 years and has an exceptional record of driving success for our firm. He began his career at Booz Allen in our old commercial business, the same business where I began, and then transitioned to serve intelligence clients. He joined my direct team in the early days of Vision 2020 and was a driving force in making that strategy a reality. Matt, went on to launch our corporate development function, and in 2017, partnered with Lloyd to lead strategic finance and transform our forecasting, planning, and analysis function. Most recently, Matt served as our chief strategy officer. All those experiences have prepared Matt to step into the CFO role and continue to drive our firm's success. I am personally fortunate to have a leader of Matt's caliber and experience as our CFO. Matt, it is my pleasure to have you join us on these earnings calls. Let's turn now to business performance. Matt and I are very excited to share excellent results for the second quarter of fiscal year 2023. During this quarter, we continued our strong revenue and EBITDA growth and accelerated both our hiring and business capture. When we began the fiscal year, we shared with you our plan to build momentum in the first half to mitigate potential for increased volatility in the second half. We also shared our view that Volt, our growth strategy centered on velocity, leadership, and technology, is not only our future but also our present. This means that we need to move rapidly to implement our strategy in order to meet our multi-year goal of growing adjusted EBITDA from $935 million last fiscal year to $1.2 to $1.3 billion by fiscal year 2025. The headline for today is this. Halfway through the fiscal year, we believe we are operationally and strategically on track to deliver on our multi-year goals. And in fact, we expect to deliver above planned financial results in fiscal year 2023. Therefore, we are pleased to raise our guidance for this fiscal year. We now expect our revenue growth range to be 8% to 10% and adjusted EBITDA range to be $975 million to $1.015 billion. Matt will cover the numbers and guidance in detail, but first I would like to take some time to frame these results as part of our larger business journey. I will first discuss how our FY23 operational priorities impact this fiscal year financials. Then I'll cover the broader progress we are making on Volt with a specific focus today on the technology dimension. As you can see, the numbers for our second quarter of fiscal year 2023 speak for themselves. While uncertainty from inflation, recessionary fears, geopolitical conflict, and ongoing budget debates remain, we have generated great momentum, which is reflected in the progress we are making against the operational priorities outlined in our May earnings call. Let me take a moment to summarize that progress. First, our top operational priority continues to be hiring. Client staff headcount has grown 4.2% over the past 12 months in a very competitive labor market. And we are seeing historically strong absorption of new hires into billable programs. These concurrent improvements are the result of transformative work by our recruiting and business teams under the leadership of our COO, Christine Martin-Anderson. Today, I am also excited to share that we have crossed the milestone of 30,000 Booz Allen employees. Our second priority is to continue to win high quality work at the intersection of key missions and new technology. Our leaders delivered an outstanding quarter of contract awards. resulting in record backlog and a 12-month book-to-bill of 1.32 times. Third, our leaders are managing the business extraordinarily well and delivering on the bottom line. We are effectively managing costs in an inflationary environment, as evidenced, for example, by the significant difference in client-staff headcount growth versus total headcount growth. This provides resiliency and enables investment. which is key to fueling future growth. And fourth, we must deploy capital in a way that creates maximum value for our stakeholders and drives our strategy forward. As we announced earlier this month, we are pleased to have closed on the acquisition of EverWatch. We're excited about the opportunities EverWatch creates to accelerate our national cyber business. Building on this strong operational backdrop, We're also making significant progress in implementing Volt. In the next few moments, I hope to illustrate how our innovation agenda and differentiated technology solutions uniquely position us to accelerate growth and contribute to achieving our multi-year investment thesis goals. Our clients live in an increasingly complex environment, pressured by geopolitical instability, global challenges from pandemics to climate change. and the increased need to invest in new technology while at the same time sustaining legacy programs, all in a fraught political and economic environment. We believe we are uniquely positioned to use innovation to simultaneously help our clients navigate these complex challenges and drive our own financial performance. Our basic premise is that technology cycles come in waves that are growing in both amplitude and frequency. Booz Allen's approach to innovation centers on helping our clients translate new technologies into mission success beyond the prototype to full scalability. We believe this requires three things. One, extensive knowledge of the mission and its requirements. Two, insights and access to new technologies early in their lifecycle. And three, an integrated talent base that can quickly scale to provide solutions and services. An excellent example of our innovation approach is our support for the Department of Veterans Affairs, where Booz Allen plays an integral role in supporting their digital transformation. Over the past decade, we have invested to grow our technical talent, deepen our mission expertise, and build solutions to help the VA modernize. leveraging capabilities like low code, no code, AI, DevOps, Agile, and cloud. Through acquisitions, we have continued to gain even greater scale and acceleration. Following this approach to innovating at the mission technology intersection, our VA business is over six times larger today than it was 10 years ago. More broadly, Vault has challenged us to reimagine our innovation agenda as part of a comprehensive chief technology office. The role of the CTO is to continuously evolve our scale technology positions and anticipate the next waves. Our ongoing investments in key emerging technologies are already building momentum. For example, we are integrating cyber and AI in our cyber precog platform For the threat hunter at the tactical edge, we are anticipating the implications of post quantum encryption. And we are developing 5G prototypes that provide dynamic spectrum sharing through an AI sensing application. Returning for a moment to the VA example, our investments in emerging technology are central to their next set of mission requirements. For example, We are developing digital twin solutions to innovate the planning and design of hybrid operating rooms using AI-powered design and clinical workflow simulations. All of this is only but a small sampling of how our innovation agenda is positioning us for future growth. These next-generation solutions and many more are becoming real today. We're excited to begin showcasing them more broadly when the Helix, our reimagined center for innovation, opens mid-November. We hope you will visit the physical or virtual versions of the Helix later this year. A closing thought. Our investment in organic growth, our strong balance sheet, our evolving operating model, and above all, our exceptional team give me confidence that we are on track to accomplish the ambitious strategic and financial objectives outlined in VOLT and our investment thesis. I am bullish about the future of Booz Allen. And with that, Matt, welcome to the earnings call. Over to you to take us through the financial results in depth.