UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 2019
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Booz Allen Hamilton Holding Corporation
(Exact name of Registrant as specified in its charter)
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Delaware | 001-34972 | 26-2634160 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
8283 Greensboro Drive, McLean, Virginia | 22102 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (703) 902-5000
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Class A Common Stock | BAH | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 28, 2019, Booz Allen Hamilton Holding Corporation (the “Company”) issued a press release announcing its results of operations for the fiscal year and quarter ended March 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.
On May 28, 2019, the Company posted to the “Investor Relations” section of its website the presentation that accompanies the earnings conference call. A copy of the presentation is attached hereto as Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Booz Allen Hamilton Holding Corporation | |
BY: | /s/ Lloyd W. Howell, Jr. |
Lloyd W. Howell, Jr. | |
Executive Vice President, Chief Financial Officer and Treasurer | |
Date: May 28, 2019
INDEX TO EXHIBITS
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
Booz | Allen | Hamilton® BOOZ ALLEN HAMILTON ANNOUNCES FINANCIAL SUMMARY 4TH QUARTER AND FULL YEAR Fourth Quarter and Full Year, ended March 31, 2019 - A FISCAL 2019 RESULTS summary of Booz Allen’s results for the fourth quarter and full year of fiscal 2019 is below. All + Company Delivers Highest Annual Revenue and Earnings, Advancing Strongly comparisons are to the prior year Toward Three-Year Goals period, as restated as a result of the + Annual Revenue Increase of 8.7 percent to a record $6.7 billion, and Revenue, adoption of two accounting Excluding Billable Expenses1 Growth of 9.1 percent standards, ASC 606 and ASU 2017-07, that were both effective + Annual Diluted Earnings Per Share of $2.91 and Adjusted Diluted Earnings Per April 1, 2018. A description of key Share1 of $2.76 drivers can be found in the Company’s Earnings Call + 20.6 percent Increase in Total Backlog to $19.3 billion; and Annual Book-to-Bill of Presentation for the fourth quarter 1.49x and full year posted on investors.boozallen.com. + Annual Headcount Increase of 5.8 percent, Adding 1,430 More Employees + Quarterly Dividend of $0.23 per Share FULL YEAR FY19 (changes are compared to prior year period) “We had a fantastic year. Technology adoption in government is accelerating, which means client demand is stronger than we’ve seen in years, particularly for our REVENUE: offerings. Across our growing business, clients are looking to gain value from today’s $6.70B +8.7% technology and to envision what technology will be able to do for them in the future. We are uniquely qualified to partner with them and very proud to advance EX. BILLABLE EXPENSES1: critical missions.” $4.70B +9.1% —HORACIO ROZANSKI President and Chief Executive Officer OPERATING INCOME: $602.4M +15.9% McLean, Virginia; May 28, 2019 - Booz Allen Hamilton Holding Corporation (NYSE: BAH), the parent company of management and technology consulting and engineering ADJ. OPERATING INCOME1: services firm Booz Allen Hamilton Inc., today announced preliminary results for the $606.1M +16.6% fourth quarter and full year of fiscal 2019. The Company delivered record performance for the fiscal year in revenue and NET INCOME: earnings, increased headcount by nearly six percent, and generated solid backlog $418.5M +38.7% growth, as it advanced strongly toward its three-year growth outlook announced last 1 June. Building on the year's momentum, the Company announced Fiscal 2020 ADJUSTED NET INCOME : guidance of between 6 percent and 9 percent Revenue growth and Adjusted Diluted $395.0M +34.2% EPS of between $2.90 and $3.05. EBITDA: The Company reported annual revenue growth of 8.7 percent, and a 9.1 percent increase in Revenue, Excluding Billable Expenses1. The strong top-line growth $671.0M +14.8% contributed to a 38.7 percent increase in Net Income to $418.5 million and 15.4 ADJUSTED EBITDA1: percent increase in Adjusted EBITDA1 to a record $674.6 million. Adjusted EBITDA Margin on Revenue1 was 10.1 percent. Diluted Earnings per Share for the year was $674.6M +15.4% $2.91, up $0.88 or 43.4 percent, and Adjusted Diluted EPS1 for the year was $2.76, up $0.77 or 38.7 percent. DILUTED EPS: $2.91 up from $2.03 Total backlog increased by 20.6 percent over the prior year period to $19.3 billion and the annual book-to-bill ratio was a record 1.49x. As of March 31, 2019, headcount was ADJUSTED DILUTED EPS1: 1,430 higher than the prior year, and increased by nearly 270 since the end of the $2.76 up from $1.99 prior quarter. 1
The Company declared a regular quarterly dividend of $0.23 per share, which is FINANCIAL SUMMARY payable on June 28, 2019, to stockholders of record on June 14, 2019. As of March 31, 2019, total backlog was $19.3 billion, compared to FINANCIAL OUTLOOK $16.0 billion as of March 31, 2018, an increase of 20.6 percent. Net For fiscal 2020, the Company provided the following guidance: cash provided by operating activities for the fourth quarter of fiscal 2019 + Revenue: Growth in the 6 to 9 percent range was $216.4 million as compared to + 1 $122.2 million in the prior year Adjusted EBITDA Margin on Revenue : In the low 10 percent range period. Free cash flow1 for the + Adjusted Diluted EPS1: $2.90 - $3.05 fourth quarter was $179.8 million, 1 compared with $106.9 million in the This Adjusted Diluted EPS estimate is based on fiscal 2020 estimated average diluted prior year period. shares outstanding in the range of 137 million to 141 million shares, and assumes an effective tax rate in the range of 23 percent to 25 percent. 3 YEAR INVESTMENT THESIS The Company updated its goals for financial performance through Fiscal 2021 related to ADEPS1 growth and Margin. For the three-year period from Fiscal Year 2018 through Fiscal Year 2021, the Investment Thesis is as follows: 4TH QUARTER FY19 (changes are compared to prior year period) REVENUE: $1.78B +9.1% Unique Market Position = Strong Financial Returns + Option Value EX. BILLABLE EXPENSES1: $1.24B +8.1% *Investments in innovation, 66% ADEPS Growth Continued investment in new talent, and capabilities position + business lines and solutions that OPERATING INCOME: us to help clients adopt current ~2% Dividend Yield will drive future growth and new technologies $135.1M +2.6% *First mover advantage Supported by: 1 enhanced by our ability to 6 - 9% Annual Revenue Growth ADJ. OPERATING INCOME : combine mission knowledge, Low 10% Range Adj. EBITDA Margin consulting heritage and $135.1M +2.6% ~$1.4B in Capital Deployment technical depth creating value for critical missions and top priorities NET INCOME: $89.6M +8.6% ADJUSTED NET INCOME1: CONFERENCE CALL INFORMATION $90.0M +21.9% Booz Allen Hamilton will host a conference call at 8 a.m. EDT on Tuesday, May 28, 2019, to discuss the financial results for its Fourth Quarter and Full Year of Fiscal EBITDA: 2019 (ending March 31, 2019). $153.3M +3.4% Analysts and institutional investors may participate on the call by dialing (877) ADJUSTED EBITDA1: 375-9141; International: (253) 237-1151, using the passcode 8764738. The $153.3M +3.4% conference call will be webcast simultaneously to the public through a link on the investor relations section of the Booz Allen Hamilton web site at investors.boozallen.com. A replay of the conference call will be available online at DILUTED EPS: investors.boozallen.com beginning at 11 a.m. EDT on May 28, 2019, and continuing $0.63 up from $0.56 for 30 days. ADJUSTED DILUTED EPS1: 1 Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, Adjusted Diluted EPS, Adjusted EBITDA Margin on Revenue and Free Cash Flow are non-GAAP financial measures. See “Non-GAAP Financial Information” below for additional detail. $0.64 up from $0.51 2
Unless otherwise specified, all references to "record" results are with respect to the ABOUT BOOZ ALLEN HAMILTON period since Booz Allen's initial public offering. For more than 100 years, military NON-GAAP FINANCIAL INFORMATION government and business leaders “Revenue, Excluding Billable Expenses” represents revenue less billable expenses. have turned to Booz Allen Hamilton to Booz Allen uses Revenue, Excluding Billable Expenses because it provides solve their most complex problems. As management useful information about the Company’s operating performance by a consulting firm with experts in excluding the impact of costs that are not indicative of the level of productivity of its analytics, digital, engineering and consulting staff headcount and its overall direct labor, which management believes cyber, we help organizations provides useful information to its investors about its core operations. transform. We are a key partner on some of the most innovative programs “Adjusted Operating Income” represents Operating Income before: (i) adjustments for governments worldwide and trusted related to the amortization of intangible assets resulting from the acquisition of our by its most sensitive agencies. We Company by The Carlyle Group (the “Carlyle Acquisition”), and (ii) transaction costs, work shoulder to shoulder with clients, fees, losses, and expenses, including fees associated with debt prepayments. Booz using a mission-first approach to Allen prepares Adjusted Operating Income to eliminate the impact of items it does choose the right strategy and not consider indicative of ongoing operating performance due to their inherent technology to help them realize their unusual, extraordinary or non-recurring nature or because they result from an event vision. of a similar nature. “Adjusted EBITDA” represents net income before income taxes, net interest and With global headquarters other expense and depreciation and amortization before certain other items, in McLean, Virginia, our firm employs including transaction costs, fees, losses, and expenses, including fees associated more than 26,000 people globally, with debt prepayments. “Adjusted EBITDA Margin on Revenue” is calculated as and had revenue of $6.70 billion for Adjusted EBITDA divided by revenue. “Adjusted EBITDA Margin on Revenue, the 12 months ended March 31, 2019. Excluding Billable Expenses” is calculated as Adjusted EBITDA divided by Revenue, To learn more, visit Excluding Billable Expenses. Booz Allen prepares Adjusted EBITDA, Adjusted EBITDA www.boozallen.com. (NYSE: BAH) Margin on Revenue, and Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non- recurring nature or because they result from an event of a similar nature. “Adjusted Net Income” represents net income before: (i) adjustments related to the amortization of intangible assets resulting from the Carlyle Acquisition, (ii) CONTACT: transaction costs, fees, losses, and expenses, including fees associated with debt Media Relations- James Fisher: prepayments, (iii) amortization or write-off of debt issuance costs and write-off of original issue discount, (iv) release of income tax reserves, and (v) re-measurement 703-337-7595 of deferred tax assets and liabilities as a result of the Tax Cuts and Jobs Act (the “2017 Tax Act”) in each case net of the tax effect where appropriate calculated using Investor Relations- Nicholas Veasey: an assumed effective tax rate. Booz Allen prepares Adjusted Net Income to 703-337-5332 eliminate the impact of items, net of tax, it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non recurring nature or because they result from an event of a similar nature. Booz Allen views net income excluding the impact of the re-measurement of the Company’s deferred tax assets and liabilities as a result of the 2017 Tax Act as an important indicator of performance consistent with the manner in which management measures and forecasts the Company’s performance and the way in which management is incentivized to perform. “Adjusted Diluted EPS” represents diluted EPS calculated using Adjusted Net Income as opposed to net income. Additionally, Adjusted Diluted EPS does not contemplate any adjustments to net income as required under the two-class method of calculating EPS as required in accordance with accounting principles generally accepted in the United States, or GAAP. “Free Cash Flow” represents the net cash generated from operating activities less the impact of purchases of property and equipment. Booz Allen utilizes and discusses in this release Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue,Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted EPS because management uses these measures for business 3
planning purposes, including managing its business reconciliation of Revenue, Excluding Billable Expenses, against internal projected results of operations and Adjusted Operating Income, Adjusted EBITDA, Adjusted measuring its performance. Management views Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Operating Income, Adjusted EBITDA, Adjusted EBITDA Revenue, Excluding Billable Expenses, Adjusted Net Income, Margin on Revenue, Adjusted EBITDA Margin on Revenue, Adjusted Diluted EPS, and Free Cash Flow to the most Excluding Billable Expenses, Adjusted Net Income, and directly comparable financial measure calculated and Adjusted Diluted EPS as measures of the core operating presented in accordance with GAAP. business, which exclude the impact of the items detailed in the supplemental exhibits, as these items are generally With respect to our expectations under “Financial Outlook” not operational in nature. These supplemental above, a reconciliation of Adjusted Diluted EPS guidance to performance measures also provide another basis for the closest corresponding GAAP measure is not available comparing period to period results by excluding potential without unreasonable efforts on a forward-looking basis differences caused by non-operational and unusual or due to our inability to predict our stock price, equity grants non-recurring items. Management also utilizes Revenue, and dividend declarations during the course of fiscal 2020. Excluding Billable Expenses because it provides Projecting future stock price, equity grants and dividends to management useful information about the Company’s be declared would be necessary to accurately calculate the operating performance by excluding the impact of costs difference between Adjusted Diluted EPS and GAAP EPS as that are not indicative of the level of productivity of its a result of the effects of the two-class method and related consulting staff headcount and its overall direct labor, possible dilution used in the calculation of EPS. which management believes provides useful information Consequently, any attempt to disclose such reconciliation to its investors about its core operations. Booz Allen also would imply a degree of precision that could be confusing utilizes and discusses Free Cash Flow in this release or misleading to investors. We expect the variability of the because management uses this measure for business above charges to have an unpredictable, and potentially planning purposes, measuring the cash generating ability significant, impact on our future GAAP financial results. of the operating business and measuring liquidity generally. Booz Allen presents these supplemental In addition, management may discuss its expectation for measures because it believes that these measures provide EBITDA margin for fiscal year 2020 from time to time. A investors and securities analysts with important reconciliation of EBITDA margin guidance to the closest supplemental information with which to evaluate Booz corresponding GAAP measure is not available without Allen’s performance, long term earnings potential, or unreasonable efforts on a forward-looking basis due to our liquidity, as applicable, and to enable them inability to predict specific quantifications of the amounts to assess Booz Allen’s performance on the same basis as that would be required to reconcile such measures. management. These supplemental performance Consequently, any attempt to disclose such reconciliation measurements may vary from and may not be comparable would imply a degree of precision that could be to similarly titled measures by other companies in Booz confusing or misleading to investors. Allen’s industry. Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted FORWARD LOOKING STATEMENTS EBITDA Margin on Revenue, Adjusted EBITDA Margin on Certain statements contained in this press release and in Revenue, Excluding Billable Expenses, Adjusted Net related comments by our management include “forward- Income, Adjusted Diluted EPS, and Free Cash Flow are looking statements” within the meaning of the Private not recognized measurements under GAAP and when Securities Litigation Reform Act of 1995. Examples of analyzing Booz Allen’s performance or liquidity, as forward-looking statements include information concerning applicable, investors should (i) evaluate each adjustment Booz Allen’s preliminary financial results, financial outlook in our reconciliation of revenue to Revenue, Excluding and guidance, including forecasted revenue, Diluted EPS, Billable Expenses, operating income to Adjusted Operating and Adjusted Diluted EPS, future quarterly dividends, and Income, net income to Adjusted EBITDA, Adjusted EBITDA future improvements in operating margins, as well as any Margin on Revenue, Adjusted EBITDA Margin on Revenue, other statement that does not directly relate to any Excluding Billable Expenses, Adjusted Net Income, and historical or current fact. In some cases, you can identify Adjusted Diluted Earnings per Share, and net cash forward-looking statements by terminology such as “may,” provided by operating activities to Free Cash Flow, “will,” “could,” “should,” “forecasts,” “expects,” “intends,” (ii) use Revenue, Excluding Billable Expenses, Adjusted “plans,” “anticipates,” “projects,” “outlook,” “believes,” Operating Income, Adjusted EBITDA, Adjusted EBITDA “estimates,” “predicts,” “potential,” “continue,” Margin on Revenue, Adjusted EBITDA Margin on Revenue, “preliminary,” or the negative of these terms or other Excluding Billable Expenses, Adjusted Net Income, and comparable terminology. Although we believe that the Adjusted Diluted EPS in addition to, and not as an expectations reflected in the forward-looking statements alternative to revenue, operating income, net income are reasonable, we can give you no assurance these or diluted EPS as measures of operating results, each expectations will prove to have been correct. as defined under GAAP, and (iii) use Free Cash Flow, in addition to, and not as an alternative to, net cash These forward-looking statements relate to future events provided by operating activities as a measure of liquidity, or our future financial performance and involve known each as defined under GAAP. Exhibit 4 includes a and unknown risks, uncertainties and other factors that may 4
cause our actual results, levels of activity, performance or leaders; misconduct or other improper activities from our achievements to differ materially from any future results, employees or subcontractors, including the improper use levels of activity, performance or achievements expressed or release of our clients’ sensitive or classified or implied by these forward-looking statements. information; increased insourcing by various U.S. These risks and other factors include: efforts by Congress government agencies due to changes in the definition of and other U.S. government bodies to reduce U.S. “inherently governmental” work, including proposals to government spending and address budgetary constraints, limit contractor access to sensitive or classified including automatic sequestration required by the Budget information and work assignments; increased competition Control Act of 2011 (as subsequently amended) and the from other companies in our industry; failure to maintain U.S. deficit, as well as associated uncertainty around the strong relationships with other contractors or the failure timing, extent, nature, and effect of such efforts; delayed of contractors with which we have entered into a sub- or funding of our contracts due to uncertainty relating to prime- contractor relationship to meet their obligations funding of the U.S. government and a possible failure of to us or our clients; inherent uncertainties and potential Congressional efforts to approve such funding and to craft adverse developments in legal or regulatory proceedings, a long-term agreement on the U.S. government’s ability to including litigation, audits, reviews, and investigations, incur indebtedness in excess of its current limits, or which may result in materially adverse judgments, changes in the pattern or timing of government funding settlements, withheld payments, penalties, or other and spending (including those resulting from or related unfavorable outcomes including debarment, as well as to cuts associated with sequestration); any issue that disputes over the availability of insurance or compromises our relationships with the U.S. government indemnification; internal system or service failures and or damages our professional reputation, including security breaches, including, but not limited to, those negative publicity concerning government contractors resulting from external or internal cyber attacks on our in general or us in particular; changes in U.S. government network and internal systems; risks related to the spending, including a continuation of efforts by the U.S. potential implementation and operation of new financial government to decrease spending for management management systems; risks inherent in the government support service contracts, and mission priorities that shift contracting environment; risks related to changes to our expenditures away from agencies or programs that we operating structure, capabilities, or strategy intended to support; U.S. government shutdowns as a result of the address client needs, grow our business or respond to failure by elected officials to fund the government; the market developments; risks associated with increased size of our addressable markets and the amount of U.S. competition, new relationships, clients, capabilities, and government spending on private contractors; failure to service offerings in our U.S. and international businesses; comply with numerous laws and regulations, including, failure to comply with special U.S. government laws and but not limited to, the Federal Acquisition Regulation regulations relating to our international operations; risks (“FAR”), the False Claims Act, the Defense Federal related to our indebtedness and credit facilities which Acquisition Regulation Supplement and FAR Cost contain financial and operating covenants; the adoption Accounting Standards and Cost Principles; our ability to by the U.S. government of new laws, rules, and compete effectively in the competitive bidding process regulations, such as those relating to organizational and delays or losses of contract awards caused by conflicts of interest issues or limits; risks related to competitors’ protests of major contract awards received completed and future acquisitions, including our ability to by us; the loss of General Services Administration Multiple realize the expected benefits from such acquisitions; an Award schedule contracts, or GSA schedules, or our inability to utilize existing or future tax benefits for any position as prime contractor on government-wide reason, including as a result of a change in laws or acquisition contract vehicles, or GWACs; changes in the regulations; variable purchasing patterns under U.S. mix of our contracts and our ability to accurately estimate government GSA schedules, blanket purchase agreements or otherwise recover expenses, time, and resources for and indefinite delivery, indefinite quantity, or IDIQ, our contracts; continued efforts to change how the U.S. contracts; and the impact of changes in accounting rules government reimburses compensation related costs and and regulations, or interpretations thereof, that may other expenses or otherwise limit such reimbursements affect the way we recognize and report our financial and an increased risk of compensation being deemed results, including changes in accounting rules governing unreasonable and unallowable or payments being recognition of revenue. Additional information concerning withheld as a result of U.S. government audit, review, or these and other factors can be found in our filings with the investigation; our ability to realize the full value of and Securities and Exchange Commission (SEC), including our replenish our backlog, generate revenue under certain of Annual Report on Form 10-K, filed with the SEC on May 28, our contracts and the timing of our receipt of revenue 2019. All forward-looking statements attributable to us or under contracts included in backlog; changes in estimates persons acting on our behalf are expressly qualified in used in recognizing revenue; an inability to attract, train, their entirety by the foregoing cautionary statements. or retain employees with the requisite skills and All such statements speak only as of the date made and, experience; an inability to timely hire, assimilate and except as required by law, we undertake no obligation to effectively utilize our employees, ensure that employees update or revise publicly any forward-looking statements, obtain and maintain necessary security clearances and/or whether as a result of new information, future events or effectively manage our cost structure; the loss of otherwise. members of senior management or failure to develop new 5 5
Exhibit 1 Booz Allen Hamilton Holding Corporation Consolidated Statements of Operations Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands, except per share data) 2019 2018 2019 2018 (Unaudited) Revenue $ 1,780,080 $ 1,631,076 $ 6,704,037 $ 6,167,600 Operating costs and expenses: Cost of revenue 815,404 755,210 3,100,466 2,866,268 Billable expenses 538,833 483,077 2,004,664 1,861,312 General and administrative expenses 272,528 244,533 927,938 855,541 Depreciation and amortization 18,216 16,560 68,575 64,756 Total operating costs and expenses 1,644,981 1,499,380 6,101,643 5,647,877 Operating income 135,099 131,696 602,394 519,723 Interest expense (22,160) (21,960) (89,517) (82,269) Other income (expense), net 4,941 (3,569) 2,526 (7,418) Income before income taxes 117,880 106,167 515,403 430,036 Income tax expense 28,305 23,661 96,874 128,344 Net income $ 89,575 $ 82,506 $ 418,529 $ 301,692 Earnings per common share: Basic $ 0.64 $ 0.57 $ 2.94 $ 2.05 Diluted $ 0.63 $ 0.56 $ 2.91 $ 2.03 6 6
Exhibit 2 Booz Allen Hamilton Holding Corporation Consolidated Balance Sheets March 31, March 31, (Amounts in thousands, except share and per share data) 2019 2018 Assets Current assets: Cash and cash equivalents $ 283,990 $ 286,958 Accounts receivable, net of allowance 1,330,364 1,133,705 Prepaid expenses and other current assets 84,986 71,309 Total current assets 1,699,340 1,491,972 Property and equipment, net of accumulated depreciation 172,453 152,364 Intangible assets, net of accumulated amortization 287,051 278,504 Goodwill 1,581,160 1,581,146 Other long-term assets 91,837 102,633 Total assets $ 3,831,841 $ 3,606,619 Liabilities and stockholders' equity Current liabilities: Current portion of long-term debt $57,924 $63,100 Accounts payable and other accrued expenses 664,948 557,559 Accrued compensation and benefits 325,553 282,750 Other current liabilities 130,814 125,358 Total current liabilities 1,179,239 1,028,767 Long-term debt, net of current portion 1,701,837 1,755,479 Income tax reserves 11,509 11,787 Deferred tax liabilities 33,238 7,274 Other long-term liabilities 230,652 240,821 Total liabilities 3,156,475 3,044,128 Stockholders’ equity: Common stock, Class A — $0.01 par value — authorized, 600,000,000 shares; issued, 159,924,825 shares at March 31, 2019 and 158,028,673 shares at March 31, 2018; outstanding, 140,027,853 shares at March 31, 2019 and 143,446,539 shares at March 31, 2018 1,599 1,580 Treasury stock, at cost — 19,896,972 shares at March 31, 2019 and 14,582,134 shares at March 31, 2018 (711,450) (461,457) Additional paid-in capital 401,596 346,958 Retained earnings 994,811 690,516 Accumulated other comprehensive loss (11,190) (15,106) Total stockholders’ equity 675,366 562,491 Total liabilities and stockholders’ equity $ 3,831,841 $ 3,606,619 7 7
Exhibit 3 Booz Allen Hamilton Holding Corporation Consolidated Statements of Cash Flows Fiscal Year Ended March 31, (Amounts in thousands) 2019 2018 Cash flows from operating activities Net income $ 418,529 $ 301,692 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 68,575 64,756 Stock-based compensation expense 31,275 23,318 Deferred income taxes 23,006 8,956 Excess tax benefits from stock-based compensation (10,777) (14,457) Amortization of debt issuance costs and loss on extinguishment 9,354 5,974 Losses (gains) on dispositions (5,464) (246) Changes in assets and liabilities: Accounts receivable, net of allowance (196,453) (126,196) Income taxes receivable / payable 32,411 9,636 Prepaid expenses and other current assets (2,328) 14,119 Other long-term assets (15,346) (12,394) Accrued compensation and benefits 44,137 11,296 Accounts payable and other accrued expenses 107,515 47,316 Accrued interest 122 6,218 Income tax reserves (278) 140 Other current liabilities (7,878) 4,755 Other long-term liabilities 3,210 24,260 Net cash provided by operating activities 499,610 369,143 Cash flows from investing activities Purchases of property, equipment, and software (94,681) (78,437) Payments for businesses acquired, net of proceeds from sales of business 5,469 (19,113) Insurance proceeds received for damage to equipment — 1,097 Net cash used in investing activities (89,212) (96,453) Cash flows from financing activities Proceeds from issuance of common stock 11,266 8,907 Stock option exercises 12,116 12,095 Repurchases of common stock (252,824) (270,318) Cash dividends paid (114,234) (103,411) Dividend equivalents paid to option holders (280) (951) Repayment of debt (170,512) (317,149) Proceeds from debt issuance 102,071 467,678 Payment on contingent liabilities from acquisition (969) — Net cash used in financing activities (413,366) (203,149) Net (decrease) increase in cash and cash equivalents (2,968) 69,541 Cash and cash equivalents — beginning of year 286,958 217,417 Cash and cash equivalents — end of year $ 283,990 $ 286,958 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 76,731 $ 62,498 Income taxes $ 52,512 $ 128,416 Supplemental disclosures of non-cash investing and financing activities Share repurchases transacted but not settled and paid $ 6,315 $ 9,146 Noncash financing activities $ 3,033 $ — 8 8
Exhibit 4 Booz Allen Hamilton Holding Corporation Non-GAAP Financial Information Three Months Ended Fiscal Year Ended March 31, March 31, (In thousands, except share and per share data) 2019 2018 2019 2018 (Unaudited) (Unaudited) Revenue, Excluding Billable Expenses Revenue $ 1,780,080 $ 1,631,076 $ 6,704,037 $ 6,167,600 Billable expenses 538,833 483,077 2,004,664 1,861,312 Revenue, Excluding Billable Expenses $ 1,241,247 $ 1,147,999 $ 4,699,373 $ 4,306,288 Adjusted Operating Income Operating Income $ 135,099 $ 131,696 $ 602,394 $ 519,723 Transaction expenses (a) — — 3,660 — Adjusted Operating Income $ 135,099 $ 131,696 $ 606,054 $ 519,723 EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue & Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses Net income $ 89,575 $ 82,506 $ 418,529 $ 301,692 Income tax expense 28,305 23,661 96,874 128,344 Interest and other, net (b) 17,219 25,529 86,991 89,687 Depreciation and amortization 18,216 16,560 68,575 64,756 EBITDA 153,315 148,256 670,969 584,479 Transaction expenses (a) — — 3,660 — Adjusted EBITDA $ 153,315 $ 148,256 $ 674,629 $ 584,479 Adjusted EBITDA Margin on Revenue 8.6% 9.1% 10.1% 9.5% Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses 12.4% 12.9% 14.4% 13.6% Adjusted Net Income Net income $ 89,575 $ 82,506 $ 418,529 $ 301,692 Transaction expenses (a) — — 3,660 — Release of income tax reserves (c) — — (462) — Re-measurement of deferred tax assets/liabilities (d) — (9,107) (27,908) (9,107) Amortization or write-off of debt issuance costs and write-off of original issue discount 519 662 2,920 2,655 Adjustments for tax effect (e) (135) (242) (1,711) (969) Adjusted Net Income $ 89,959 $ 73,819 $ 395,028 $ 294,271 Adjusted Diluted Earnings Per Share Weighted-average number of diluted shares outstanding 141,050,704 145,577,134 143,156,176 147,750,022 Adjusted Net Income Per Diluted Share (f) $ 0.64 $ 0.51 $ 2.76 $ 1.99 Free Cash Flow Net cash provided by operating activities $ 216,407 $ 122,223 $ 499,610 $ 369,143 Less: Purchases of property and equipment (36,605) (15,370) (94,681) (78,437) Free Cash Flow $ 179,802 $ 106,853 $ 404,929 $ 290,706 (a) Reflects debt refinancing costs incurred in connection with the refinancing transaction consummated on July 23, 2018. (b) Reflects the combination of Interest expense and Other income (expense), net from the consolidated statement of operations. (c) Release of pre-acquisition income tax reserves assumed by the Company in connection with the Carlyle Acquisition. (d) Reflects primarily the adjustments made to the provisional income tax benefit associated with the re-measurement of the Company's deferred tax assets and liabilities as a result of the 2017 Tax Act, including a measurement period adjustment associated with the unbilled receivables method change approved by the IRS in the third quarter of fiscal 2019. (e) With the enactment of the 2017 Tax Act, fiscal 2018 and fiscal 2019 adjustments are reflected using assumed effective tax rates of 36.5% and 26%, which approximate the blended federal and state tax rates for fiscal 2018 and 2019, respectively, and consistently exclude the impact of other tax credits and incentive benefits realized. (f) Excludes an adjustment of approximately $0.4 million and $1.8 million of net earnings for the three and twelve months ended March 31, 2019, respectively, and excludes an adjustment of approximately $0.4 million and $1.9 million of net earnings for the three and twelve months ended March 31, 2018, respectively, associated with the application of the two-class method for computing diluted earnings per share. 9 9
Exhibit 5 Booz Allen Hamilton Holding Corporation Operating Data As of March31, (Amounts in millions) 2019 2018 Backlog Funded $ 3,436 $ 2,685 Unfunded 3,687 4,161 Priced Options 12,198 9,174 Total Backlog $ 19,321 $ 16,020 Three Months Ended Fiscal Year Ended March 31, March 31, 2019 2018 2019 2018 Book-to-Bill * 0.36 0.60 1.49 1.39 * Book-to-bill is calculated as the change in total backlog during the relevant fiscal period plus the relevant fiscal period revenue, all divided by the relevant fiscal period revenue. As of March31, 2019 2018 Headcount Total Headcount 26,069 24,639 Consulting Staff Headcount 23,379 22,145 Three Months Ended Fiscal Year Ended March 31, March 31, 2019 2018 2019 2018 Percentage of Total Revenue by Contract Type Cost-Reimbursable 54% 52% 53% 51% Time-and-Materials 23% 25% 24% 25% Fixed-Price 23% 23% 23% 24% Three Months Ended March 31, 2019 2018 Days Sales Outstanding ** 70 66 ** Calculated as total accounts receivable divided by revenue per day during the relevant fiscal quarter. 101 0
EARNINGS CALL PRESENTATION Fiscal Year 2019, Fourth Quarter May 28, 2019
HORACIO ROZANSKI CALL President and Chief Executive Officer PARTICIPANTS LLOYD HOWELL Chief Financial Officer and Treasurer NICHOLAS VEASEY Vice President of Investor Relations 2
DISCLAIMER Forward Looking Safe Harbor Statement Certain statements contained in this presentation and in related comments by our management include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning Booz Allen’s preliminary financial results, financial outlook and guidance, including forecasted revenue, Diluted EPS, Adjusted Diluted EPS, free cash flow, future quarterly dividends, and future improvements in operating margins, as well as any other statement that does not directly relate to any historical or current fact. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. These forward-looking statements 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, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in or implied by these forward-looking statements, including those factors discussed in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, which can be found at the SEC’s website at www.sec.gov. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made and, 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. Note Regarding Non-GAAP Financial Data Information Booz Allen discloses in the following information Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow which are not recognized measurements under GAAP, and when analyzing Booz Allen’s performance or liquidity as applicable, investors should (i) evaluate each adjustment in our reconciliation of revenue to Revenue, Excluding Billable Expenses, operating income to Adjusted Operating Income, net income to Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income and Adjusted Diluted Earnings Per Share, and net cash provided by operating activities to Free Cash Flow, and the explanatory footnotes regarding those adjustments, each as defined under GAAP, (ii) use Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted EPS in addition to, and not as an alternative to revenue, operating income, net income or diluted EPS as measures of operating results, and (iii) use Free Cash Flow in addition to and not as an alternative to net cash provided by operating activities as a measure of liquidity, each as defined under GAAP. The Financial Appendix includes a reconciliation of Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow to the most directly comparable financial measure calculated and presented in accordance with GAAP. Booz Allen presents these supplemental performance measures because it believes that these measures provide investors and securities analysts with important supplemental information with which to evaluate Booz Allen’s performance, long term earnings potential, or liquidity, as applicable and to enable them to assess Booz Allen’s performance on the same basis as management. These supplemental performance and liquidity measurements may vary from and may not be comparable to similarly titled measures by other companies in Booz Allen’s industry. With respect to our expectations under “Fiscal 2020 Full Year Outlook,” reconciliation of Adjusted Diluted EPS guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to our inability to predict our stock price, equity grants and dividend declarations during the course of fiscal 2019. Projecting future stock price, equity grants and dividends to be declared would be necessary to accurately calculate the difference between Adjusted Diluted EPS and GAAP EPS as a result of the effects of the two-class method and related possible dilution used in the calculation of EPS. Consequently, any attempt to disclose such reconciliation would imply a degree of precision that could be confusing or misleading to investors. We expect the variability of the above charges to have an unpredictable, and potentially significant, impact on our future GAAP financial results. For the same reason, a reconciliation of Adjusted EBITDA Margin on Revenue guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to our inability to predict specific quantifications of the amounts that would be required to reconcile such measures. All quarterly financial information for the fiscal year ended March 31, 2017 presented herein is as previously reported under ASC 605 while the annual financial information for the fiscal year ended March 31, 2017 was retroactively recast for the effects of ASC 606 and ASU 2017-07, as required. Unless otherwise specified, all references to "record" results are with respect to the period since Booz Allen's initial public offering. 3
KEY FINANCIAL RESULTS FISCAL YEAR 2019 RESULTS FOURTH QUARTER (1) FISCAL YEAR 2019 (1) Revenue $1.8 billion 9.1% Increase $6.7 billion 8.7% Increase Revenue, Excluding Billable Expenses $1.2 billion 8.1% Increase $4.7 billion 9.1% Increase Adjusted EBITDA $153 million 3.4% Increase $675 million 15.4% Increase Adjusted EBITDA Margin on Revenue 8.6% (5.3)% Decrease 10.1% 6.1% Increase Net Income $90 million 8.6% Increase $419 million 38.7% Increase Adjusted Net Income $90 million 21.9% Increase $395 million 34.2% Increase Diluted EPS $0.63 12.5% Increase $2.91 43.4% Increase Adjusted Diluted EPS $0.64 25.5% Increase $2.76 38.7% Increase Net Cash Provided by Operating $216 million 77.1% Increase $500 million 35.3% Increase Activities (1) Comparisons are to prior fiscal year periods 4
FY'19 PERFORMANCE: ALIGNED WITH INVESTMENT THESIS UPDATED INVESTMENT THESIS Unique Market Position = Strong Financial Returns + Option Value – Investments in innovation, talent, FY'18 - FY'21 – Continued investment in and capabilities position us to help new business lines and clients adopt current and new 66% ADEPS GROWTH BY FY'21 1 solutions that will drive technologies future growth – First mover advantage enhanced by + ~2% DIVIDEND YIELD our ability to combine mission knowledge, consulting heritage and 6 - 9% Low 10% Range ~$1.4B technical depth creating value for critical missions and top priorities Annual Revenue Adj. EBITDA Capital Growth Margins 1 Deployment INDUSTRY LEADING ORGANIC – Organic growth in revenue ex-billables of ~9% year-over-year driven by continued strong client demand REVENUE GROWTH – ~6% year-over-year headcount growth; poised to execute on largest fiscal-year book-to-bill since IPO – Adj. EBITDA margin on revenue of 10.1%; record Adj. EBITDA of $675M (~15% growth year-over-year) CONTRACT PERFORMANCE – Organic growth and strong contract-level execution continue to drive profitability DRIVES MARGIN EXPANSION – FY'20 guidance of Adj. EBITDA margin in the low 10% range – $78 million in Q4 share repurchases; $250 million through March 31, 2019 PRUDENT CAPITAL – $32 million in Q4 quarterly dividends; $114 million through March 31, 2019 DEPLOYMENT – Reaffirming three-year goal to deploy ~$1.4B; achieved goal to deploy >$350M during FY'19 1) ADEPS and Adjusted EBITDA Margin goals have been updated to reflect our performance one year into our Investment Thesis 5
Page 4 intentionally repeated KEY FINANCIAL RESULTS FISCAL YEAR 2019 RESULTS FOURTH QUARTER (1) FISCAL YEAR 2019 (1) Revenue $1.8 billion 9.1% Increase $6.7 billion 8.7% Increase Revenue, Excluding Billable Expenses $1.2 billion 8.1% Increase $4.7 billion 9.1% Increase Adjusted EBITDA $153 million 3.4% Increase $675 million 15.4% Increase Adjusted EBITDA Margin on Revenue 8.6% (5.3)% Decrease 10.1% 6.1% Increase Net Income $90 million 8.6% Increase $419 million 38.7% Increase Adjusted Net Income $90 million 21.9% Increase $395 million 34.2% Increase Diluted EPS $0.63 12.5% Increase $2.91 43.4% Increase Adjusted Diluted EPS $0.64 25.5% Increase $2.76 38.7% Increase Net Cash Provided by Operating $216 million 77.1% Increase $500 million 35.3% Increase Activities (1) Comparisons are to prior fiscal year periods 6
HISTORICAL BACKLOG & BOOK-TO-BILL BACKLOG (1) $21.4 $20.5$20.4 $22.0 $19.3 $12.4 $17.0 $12.4 $16.7 $16.7 $16.1 $12.2 $16.5 s $13.6 $13.5 $13.6 $14.0 $9.2 $9.6 $10.1 n $12.0 $9.2 o i $8.3 l $7.0 $7.5 $7.7 l i $11.0 $6.5 b n $4.8 i $4.5 $5.5 $3.3 $3.9 $4.2 $4.2 $4.1 $3.7 $2.9 $3.2 $3.1 $3.2 $4.2 $3.3 $2.8 $2.8 $3.6 $2.9 $2.7 $2.8 $3.5 $3.4 $0.0 $2.6 $2.5 (2) (2) (2) (2) (3) (3) (3) (3) (4) (4) (4) (4) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Funded Unfunded Priced Options BOOK-TO-BILL TRENDS - HIGHEST FISCAL YEAR 4.0x 3.66x 3.0x 2.70x 2.17x 2.0x 1.64x 1.14x 1.31x 0.92x 1.04x 0.99x 0.60x 1.0x 0.45x 0.36x 0.0x Q1'17 (2) Q2'17 (2) Q3'17 (2) Q4'17 (2) Q1'18 (3) Q2'18 (3) Q3'18 (3) Q4'18 (3) Q1'19 (4) Q2'19 (4) Q3'19 (4) Q4'19 (4) Quarterly Book-to-Bill LTM Book-to-Bill 1) For more information on the components of backlog, and the differences between backlog 2) Revenue as reported under ASC 605 and remaining performance obligations, please see the Company's Form 10-K for the fiscal 3) Revenue as adjusted from previously reported to reflect ASC 606 and ASU 2017-07 year ending 3/31/19 4) Revenue as reported, reflecting ASC 606 and ASU 2017-07 7
CAPITAL ALLOCATION DELIVERING STRONG CAPITAL RETURNS THROUGH EFFICIENT CAPITAL DEPLOYMENT STRATEGY – Achieved our target of deploying >$350M during FY'19; multi-year capital deployment plan remains on track, subject to market conditions – Deployed ~$364M during FY'19, including ~$110M during the fourth quarter – Aim to deploy ~$1.0 billion over the next two fiscal years, aligning with our overall three-year goal of $1.4B – In May, our Board approved a $400M increase in our share repurchase authorization bringing our remaining capacity to ~$658M – Ample cash on hand and balance sheet capacity to support our capital deployment objectives – The Board authorized a regular dividend of 23 cents per share, payable on June 28th to stockholders of record on June 14th QUARTERLY CAPITAL DEPLOYMENT ($ IN MILLIONS) LTM CAPITAL DEPLOYMENT ($ IN MILLIONS) $373.0 $384.5 $362.1 $364.2 $108.2 $110.1 $110.1 $269.6 $279.1 $307.3 $252.6 $250.0 $80.5 $83.0 $77.7 $200.1 $75.5 $68.3 $48.1 $41.1 $105.4 $27.7 $27.4 $27.2 $27.1 $32.4 $103.4 $107.2 $109.5 $114.2 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Quarterly Dividends Share Repurchases Quarterly Dividends Share Repurchases 8
FINANCIAL OUTLOOK FULL YEAR FY'20 GUIDANCE OPERATING PERFORMANCE CURRENT Revenue Growth 6.0 - 9.0% Adjusted EBITDA Margin on Revenue Low 10% range Adjusted Diluted EPS $2.90 - $3.05 Net Cash Provided by Operating Activities $400 - $450 million ASSUMPTIONS FOR ADEPS GUIDANCE CURRENT Tax Rate 23 - 25% Share Count 137 - 141 million 9
APPENDIX 10
NON-GAAP FINANCIAL INFORMATION "Revenue, Excluding Billable Expenses" represents revenue less billable expenses. We use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs that are not indicative of the level of productivity of our consulting staff headcount and our overall direct labor, which management believes provides useful information to our investors about our core operations. "Adjusted Operating Income" represents operating income before: (i) adjustments related to the amortization of intangible assets resulting from the acquisition of our Company by The Carlyle Group (the “Carlyle Acquisition”), and (ii) transaction costs, fees, losses, and expenses, including fees associated with debt prepayments. We prepare Adjusted Operating Income to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. "Adjusted EBITDA" represents net income before income taxes, net interest and other expense and depreciation and amortization and before certain other items, including transaction costs, fees, losses, and expenses, including fees associated with debt prepayments. “Adjusted EBITDA Margin on Revenue” is calculated as Adjusted EBITDA divided by revenue. Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses is calculated as Adjusted EBITDA divided by Revenue, Excluding Billable Expenses. The Company prepares Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature. "Adjusted Net Income" represents net income before: (i) adjustments related to the amortization of intangible assets resulting from the Carlyle Acquisition, (ii) transaction costs, fees, losses, and expenses, including fees associated with debt prepayments, (iii) amortization or write-off of debt issuance costs and write-off of original issue discount, (iv) release of income tax reserves, and (v) re-measurement of deferred tax assets and liabilities as a result of the 2017 Tax Act in each case net of the tax effect where appropriate calculated using an assumed effective tax rate. We prepare Adjusted Net Income to eliminate the impact of items, net of tax, we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. We view net income excluding the impact of the re-measurement of the Company's deferred tax assets and liabilities as a result of the 2017 Tax Act as an important indicator of performance consistent with the manner in which management measures and forecasts the Company's performance and the way in which management is incentivized to perform. "Adjusted Diluted EPS" represents diluted EPS calculated using Adjusted Net Income as opposed to net income. Additionally, Adjusted Diluted EPS does not contemplate any adjustments to net income as required under the two-class method as disclosed in the footnotes to the consolidated financial statements. "Free Cash Flow" represents the net cash generated from operating activities less the impact of purchases of property and equipment. 11
NON-GAAP FINANCIAL INFORMATION Three Months Ended Fiscal Year Ended March 31, March 31, (In thousands, except share and per share data) 2019 2018 2019 2018 (a) Reflects debt refinancing costs incurred in (Unaudited) (Unaudited) connection with the refinancing transaction Revenue, Excluding Billable Expenses consummated on July 23, 2018. Revenue $ 1,780,080 $ 1,631,076 $ 6,704,037 $ 6,167,600 Billable expenses 538,833 483,077 2,004,664 1,861,312 (b) Reflects the combination of Interest expense Revenue, Excluding Billable Expenses $ 1,241,247 $ 1,147,999 $ 4,699,373 $ 4,306,288 and Other income (expense), net from the Adjusted Operating Income consolidated statement of operations. Operating Income $ 135,099 $ 131,696 $ 602,394 $ 519,723 (c) Release of pre-acquisition income tax reserves Transaction expenses (a) — — 3,660 — assumed by the Company in connection with the Adjusted Operating Income $ 135,099 $ 131,696 $ 606,054 $ 519,723 Carlyle Acquisition. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue & Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses (d) Reflects primarily the adjustments made to the Net income $ 89,575 $ 82,506 $ 418,529 $ 301,692 provisional income tax benefit associated with the Income tax expense 28,305 23,661 96,874 128,344 re-measurement of the Company's deferred tax Interest and other, net (b) 17,219 25,529 86,991 89,687 assets and liabilities as a result of the 2017 Tax Depreciation and amortization 18,216 16,560 68,575 64,756 Act, including a measurement period adjustment EBITDA 153,315 148,256 670,969 584,479 associated with the unbilled receivables method Transaction expenses (a) — — 3,660 — change approved by the IRS in the third quarter of Adjusted EBITDA $ 153,315 $ 148,256 $ 674,629 $ 584,479 fiscal 2019. Adjusted EBITDA Margin on Revenue 8.6% 9.1% 10.1% 9.5% (e) With the enactment of the 2017 Tax Act, fiscal Adjusted EBITDA Margin on Revenue, Excluding Billable 2018 and fiscal 2019 adjustments are reflected Expenses 12.4% 12.9% 14.4% 13.6% using assumed effective tax rates of 36.5% and Adjusted Net Income 26%, which approximate the blended federal and Net income $ 89,575 $ 82,506 $ 418,529 $ 301,692 state tax rates for fiscal 2018 and 2019, Transaction expenses (a) — — 3,660 — respectively, and consistently exclude the impact of Release of income tax reserves (c) — — (462) — other tax credits and incentive benefits realized. Re-measurement of deferred tax assets/liabilities (d) — (9,107) (27,908) (9,107) (f) Excludes an adjustment of approximately $0.4 Amortization or write-off of debt issuance costs and write-off of million and $1.8 million of net earnings for the original issue discount 519 662 2,920 2,655 three and twelve months ended March 31, 2019, Adjustments for tax effect (e) (135) (242) (1,711) (969) respectively, and excludes an adjustment of Adjusted Net Income $ 89,959 $ 73,819 $ 395,028 $ 294,271 approximately $0.4 million and $1.9 million of net earnings for the three and twelve months Adjusted Diluted Earnings Per Share ended March 31, 2018, respectively, associated Weighted-average number of diluted shares outstanding 141,050,704 145,577,134 143,156,176 147,750,022 with the application of the two-class method for Adjusted Net Income Per Diluted Share (f) $ 0.64 $ 0.51 $ 2.76 $ 1.99 computing diluted earnings per share. Free Cash Flow Net cash provided by operating activities $ 216,407 $ 122,223 $ 499,610 $ 369,143 Less: Purchases of property and equipment (36,605) (15,370) (94,681) (78,437) Free Cash Flow $ 179,802 $ 106,853 $ 404,929 $ 290,706 12
FINANCIAL RESULTS – KEY DRIVERS Fourth Quarter Fiscal 2019 – Below is a summary of the key factors driving results for the fiscal 2019 fourth quarter ended March 31, 2019 as compared to the prior year period: • Revenue increased by 9.1% to $1.8 billion driven primarily by continued strength in client demand, which led to increased client staff headcount and an increase in direct client staff labor, as well as improved contract performance. Revenue growth was also driven by an increase in billable expenses, including subcontractors and direct expenses incurred on behalf of our clients. • Revenue, Excluding Billable Expenses increased 8.1% to $1.2 billion due to increased client demand which led to increased client staff headcount, an increase in direct client staff labor, and improved contract performance. • Operating Income and Adjusted Operating Income both increased 2.6% to $135.1 million. Increases in both were primarily driven by the same factors driving revenue growth. • Net income increased 8.6% to $89.6 million and Adjusted Net Income increased 21.9% to $90.0 million. These increases were primarily driven by the same factors as Operating Income and Adjusted Operating Income. Net income and Adjusted Net Income also benefited from the Company’s recognition of an income tax benefit driven by the lower federal corporate tax rate. • EBITDA and Adjusted EBITDA both increased 3.4% to $153.3 million. These increases were due to the same factors as Operating Income and Adjusted Operating Income. • Diluted EPS increased to $0.63 from $0.56 and Adjusted Diluted EPS increased to $0.64 from $0.51. The increases were primarily driven by the same factors as Net Income and Adjusted Net Income, as well as a lower share count in the fourth quarter of fiscal 2019. • As of March 31, 2019, total backlog was $19.3 billion, an increase of 20.6%. Funded backlog was $3.4 billion, an increase of 28.0%. 13
FINANCIAL RESULTS – KEY DRIVERS Fiscal Year Ended March 31, 2019 – Booz Allen's cumulative performance for fiscal 2019 has resulted in: • Net cash proved by operating activities was $499.6 million for the year ended March 31, 2019 as compared to $369.1 million in the prior year period. The improvement in operating cash flow over the prior year was primarily due to revenue growth and lower cash paid for taxes in fiscal 2019 as compared to fiscal 2018. Free Cash Flow was $404.9 million for the year ended March 31, 2019 as compared to $290.7 million for the year ended March 31, 2018. Free Cash Flow was affected by the same factors affecting cash provided by operating activities, partially offset by an increase in capital expenditures over the prior year primarily related to investments in our facilities and infrastructure, financial management systems and information technology. 14