BOOZ ALLEN HAMILTON HLDG CORP Q3 2011 Earnings Conference Call Transcript - Thomson StreetEvents

BOOZ ALLEN HAMILTON HLDG CORP Q3 2011 Earnings Conference Call Transcript

22 pages (11853 words) — Published Feb 09, 2011
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Abstract:

Edited Transcript of BAH earnings conference call or presentation 9-Feb-11 1:00pm GMT

  
Brief Excerpt:

...Operator Good morning, thank you for standing by and welcome to the Booz Allen Hamilton third-quarter fiscal 2011 earnings call. At this time, all lines are in a listen only mode. Later there will be an opportunity for questions. I would now like to turn the call over to Mr. Kevin Cook. Mr. Cook, please proceed. Kevin Cook ...

  
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Adam Frisch - Morgan Stanley - Analyst : Thanks. Good morning, guys. Congratulations on your first quarter as a public company. Your headcount was a little bit higher than we expected, which obviously bodes well for near-term revs. But because you're a new public company, I thought it would be helpful for shareholders if you talked about the next couple quarters maybe, Sam, and laid out where you think backlog and headcount will trend over the next couple of months.


Question: Adam Frisch - Morgan Stanley - Analyst : Okay, do you think backlog numbers -- again we kind of have limited data because we only have a couple of years of information on the Company. But do you think -- how did the backlog number trend? I think that's a data point that a lot of people focus on, specifically the funded backlog number. Last year it was down in the December quarter, so not sure if two data points make it a seasonal point or not, but if you could just kind of give some color there because I think people are focused on that.


Question: Adam Frisch - Morgan Stanley - Analyst : Okay, great. Just a couple more and then I'll turn it over. We know what we see and hear in the media as it relates to the government spending and how that may or may not change. You talk about the continuing resolution that we are under. Maybe give us a flavor though for what you guys are seeing in the field in terms of the types and tone of the conversations you're having with your clients. I assume that's all reflected obviously in your outlook for fiscal 12. Maybe just a little bit more color in terms of what is going on inside the conference rooms with your clients.


Question: Adam Frisch - Morgan Stanley - Analyst : Okay, great. Just last question here, point of clarification. Sam, the commercial revenue that you spoke to, the priority, it's great to see you zeroing in on some opportunities. Is this something that is included in your guidance for fiscal 12 or would it represent an incremental to the high double, low double digit? Thanks, guys.


Question: Adam Frisch - Morgan Stanley - Analyst : Perfect, thanks, guys. Congratulations.


Question: Joseph Campbell - Barclays Capital - Analyst : Thank you. Good morning, Ralph, Horatio, Sam and Kevin and congratulations from our side as well on your first quarter as a public company. We were very impressed by that 15% year-over-year backlog we really don't see much given the continuing resolution that's been I think awfully hard and that's a very, very nice number. We wanted to ask if you could give us however on the outlook some granularity about how your -- you reported that everything was up in defense, civil and intelligence and we wondered if you could give us a little more sense of how these individual sectors looked for you both in the results that we are seeing and more importantly, as you look out to 2012. Which of these is showing the best strength and which of them is showing a little less?


Question: Joseph Campbell - Barclays Capital - Analyst : Thanks, Sam, within defense, were there any particular pockets of strength or weakness? I mean we've seen some differences in some of the earlier data between the Army and the Navy and the Air Force and the DOD agencies. Anything particular that -- in terms of how the various military departments are doing?


Question: Joseph Campbell - Barclays Capital - Analyst : Do you see that as something likely to continue into 2012?


Question: Joseph Campbell - Barclays Capital - Analyst : And then turning to the -- as you pointed out, the end of the non-compete with your former Booz partners in the civil side, you're going to continue to do things you were precluded from doing starting halfway through next year. Have you included some estimates for revenue and profits in that world in your guidance or have you left that out awaiting to see how you might do? companies. FEBRUARY 09, 2011 / 1:00PM, BAH - Q3 2011 BOOZ ALLEN HAMILTON HLDG CORP Earnings Conference Call


Question: Joseph Campbell - Barclays Capital - Analyst : And just one more. Because of the continuing resolution, I mean we see it affecting the sort of normal seasonal patterns because so many things have been on hold waiting for the Congress to sort of get off its ass and vote a bill. Do you think that we might see some aberrations in the normal Booz pattern? Or you mentioned before your sort of big proposal season and a regular rhythm to the business. Do you see the CR upsetting that rhythm that you've usually seen?


Question: Joseph Campbell - Barclays Capital - Analyst : Terrific, well thank you for your answers, Sam, and for the detail in the presentation and congratulations to all of you from Carter and Joe and the rest of the Barclays team.


Question: Jim Kissane - BAS-ML - Analyst : I would like to add my congratulations as well. Just a question on the margin performance. It was very solid. companies. FEBRUARY 09, 2011 / 1:00PM, BAH - Q3 2011 BOOZ ALLEN HAMILTON HLDG CORP Earnings Conference Call Is the shift to the fixed price -- I guess the move from (inaudible) sequentially 13 to 16%, is that the primary driver of the stronger margins or are there some other factors that you can kind of talk about? Thanks.


Question: Jim Kissane - BAS-ML - Analyst : Was there any particular contracts that shifted to fixed-price that would've moved the needle that much?


Question: Jim Kissane - BAS-ML - Analyst : And I know you don't break out cyber as a line, but can you give us maybe a sense of the growth rate behind cyber? It seems like it's the hottest topic and where you've seen a lot of investor interest. So not breaking out the absolute number, but just sort of the growth rate for cybersecurity projects. Thank you.


Question: Jim Kissane - BAS-ML - Analyst : Excellent, thank you very much.


Question: Rob Spingarn - Credit Suisse - Analyst : Again, our congratulations on your first quarter. I have a couple of questions. I really want to clarify on the continuing resolution with regard to the fact that you're looking for I think the low 9s on sales growth, that would imply about 11% in the final quarter based on the fact that the first three quarters have been a little bit lower. Is that a fair assumption? And what would drive that?


Question: Rob Spingarn - Credit Suisse - Analyst : Okay and that extra business day in March of 2011, that's compared to March of 2010?


Question: Rob Spingarn - Credit Suisse - Analyst : Okay, and then specifically I think Joe touched on this earlier, but your guidance assumption for 12 on the revenue side, taking the commercial out of it, does that contemplate a full-year CR in government fiscal 2011 or there's no specific assumption to that?


Question: Rob Spingarn - Credit Suisse - Analyst : Okay and then what kind of adjusted EBITDA margin are you expecting in your fiscal 2012 guidance and also what tax rate?


Question: Rob Spingarn - Credit Suisse - Analyst : Okay and then just as a final question, looking at the cost of services, that went up slightly to just under 52%. Although I do notice historically it moves around a bit. Does that reflect higher costs? Is it emblematic of any kind of pricing adjustment or this shift towards a more fixed-price contract? How should we think about the percentage of cost of services?


Question: Rob Spingarn - Credit Suisse - Analyst : Okay, just the last thing, maybe this is for Kevin. Is there any kind of cost under target assumption or adjustment that we should be thinking about with the revenue performance here?


Question: Bill Loomis - Stifel Nicolaus - Analyst : Good morning, gentlemen, and great results here. Just looking at the -- couple things. First, Sam, you talked about awards where you said the backlog will trend down. Were you talking about total or funded backlog?


Question: Bill Loomis - Stifel Nicolaus - Analyst : Okay, so you aren't trying to imply that awards book to bill will be below one times revenue? That was not your implication?


Question: Bill Loomis - Stifel Nicolaus - Analyst : And then the second is on the interest savings, the $35 million a year in interest savings, so what actual rate should I put in including any amortized fees should I think about for the different debt classes? Not the LIBOR plus spread but what the actual rate is today?


Question: Bill Loomis - Stifel Nicolaus - Analyst : Okay and that will be implied -- that will be in the interest expense line also?


Question: Bill Loomis - Stifel Nicolaus - Analyst : And then just one more thing on the -- I know you're not giving quarterly guidance for fiscal 2012, but do you still expect like the year to year patterns we saw in fiscal 2011 where the first quarter was quite strong on margins? Do you expect that to repeat when we look through the quarters in fiscal 12?


Question: Bill Loomis - Stifel Nicolaus - Analyst : Okay, and then sequentially decline into the September quarter in terms of margins and December being lower than September?


Question: Bill Loomis - Stifel Nicolaus - Analyst : Okay, well thanks a lot. Great quarter, guys.


Question: Brian Gesuale - Raymond James - Analyst : Congratulations again on your first quarter out of the gate. Most of my questions have been answered, but wondering if you could give us a little bit of additional color on the pipeline of new opportunities out there, whether it's in terms of proposals submitted, bids outstanding or pending proposals that you expect to submit, just some color around the general business development activity.


Question: Brian Gesuale - Raymond James - Analyst : Would you characterize the year-over-year growth in the proposals outstanding or the pipeline -- is it growing commensurate with funded backlog? Lagging it, leading it? Is there any way to kind of characterize it in a historical context quantitatively?


Question: Brian Gesuale - Raymond James - Analyst : Okay, terrific. Just wanted to follow up on margins. They were impressive in the quarter. Can you maybe remind us of the difference in margins for the commercial opportunities versus the government? And then the sustainability of that increase in fixed price contract mix?


Question: Brian Gesuale - Raymond James - Analyst : Great, that's helpful, guys. Thanks a lot and congratulations.


Question: Michael Lewis - Lazard Capital Markets - Analyst : Good morning, everyone. Thanks for taking my question. Sam, I just wanted to circle back on the IDIQ that you were discussing a few minutes ago. Was that the $189 million contract that you won for work over in San Diego?


Question: Michael Lewis - Lazard Capital Markets - Analyst : And none of that had been embedded in the funded backlog at this time, right?


Question: Michael Lewis - Lazard Capital Markets - Analyst : And then just to circle back on another recent contract win I haven't seen you press release yet, on January 20, it looks like DARPA put out a [SBIR] admin services contract. It's about $225 million total value to you and I'm wondering is this a five-year program or has this ben shortened to say a three-year timeline?


Question: Michael Lewis - Lazard Capital Markets - Analyst : Okay, I will circle back with you on that. Horatio, I just wanted to circle back on another cyber comment that you made. With regard to the focus of the cyber operation within the intelligence community, are you focusing more on the [C&D], computer network attack or exploitation markets? Which one of the three are you really pinpointing your expertise? companies. FEBRUARY 09, 2011 / 1:00PM, BAH - Q3 2011 BOOZ ALLEN HAMILTON HLDG CORP Earnings Conference Call


Question: Michael Lewis - Lazard Capital Markets - Analyst : Okay, that's fair. And, Sam, just one more question for you just to make sure that the models are right here. On the debt, where exactly will you roll out of fiscal year 2011 on the debt line? And that is also including the deferred payment obligation. Could you give us some help there, thanks?


Question: Michael Lewis - Lazard Capital Markets - Analyst : Okay, thank you so much. Congratulations on the quarter.


Question: George Price - BB&T Capital - Analyst : Great, thanks very much. Hope you guys can hear me OK and let me extend my congratulations as well on your first report as a public company. Just I'd like to circle back on a few things. First on the revenue growth, obviously still showing very healthy growth relative to most of your public peers. But also pulling back a little bit on the 10% plus kind of expectation that I think was previously discussed and just a couple questions on that. First, can you talk about specifically what changed and how things evolved relative to your expectations over the last several months? And second, in light of that, and I know you talked a little bit about this, but I guess what kind of specifically gives you confidence from here that maybe the upper single digits plus range is achievable even if we continue to see some bumps in the budgeting and spending environment? companies. FEBRUARY 09, 2011 / 1:00PM, BAH - Q3 2011 BOOZ ALLEN HAMILTON HLDG CORP Earnings Conference Call


Question: George Price - BB&T Capital - Analyst : Okay and maybe if you could also comment a little bit on margin expectations. Again I know you talked a little bit about it, but on an adjusted EBITDA basis, are you sticking with kind of the 10% annual increase you think you can achieve or perhaps do you see more than that at this point?


Question: George Price - BB&T Capital - Analyst : Oh, sorry if I misspoke.


Question: George Price - BB&T Capital - Analyst : Very strong cash flow which I think is great. Couple questions on that. I guess what are your debt repayment assumptions going forward? And maybe what is a comfortable level of cash, that is cash on the balance sheet for you, when we think about modeling cash and then how much you might defer to paying down debt?


Question: George Price - BB&T Capital - Analyst : That's in that fiscal Q3 and fiscal Q4 12?


Question: George Price - BB&T Capital - Analyst : Yes, yes. And I guess what is kind of a comfortable crash level for you guys?


Question: George Price - BB&T Capital - Analyst : Last thing, if I could. I was wondering if maybe you could talk a little bit about award flow under some of your largest contracts, the SURVIAC contracts for example, S3, maybe IATAC given that those are some pretty interesting work for you guys. How have things been moving there in this environment? And if you could also maybe comment on anticipated recompete activity timing and magnitude over the next maybe six to 12 months. Thank you very much.


Question: George Price - BB&T Capital - Analyst : And re-competes?


Question: George Price - BB&T Capital - Analyst : What percentage just -- should we assume that 20% or so gets re-competed every year?


Question: George Price - BB&T Capital - Analyst : Fair enough, thanks very much for your time.

Table Of Contents

Booz Allen Hamilton Hldg Corp Q3 2012 Earnings Conference Call Transcript – 2012-02-03 – $54.00 – Edited Transcript of BAH earnings conference call or presentation 3-Feb-12 1:00pm GMT

Booz Allen Hamilton Holding Corp presents at Credit Suisse 2011 Aerospace and Defense Conference Transcript – 2011-11-30 – $54.00 – Final Transcript of BAH presentation 30-Nov-11 8:30pm GMT

Booz Allen Hamilton Holding Corp Q2 2012 Earnings Conference Call Transcript – 2011-11-03 – $54.00 – Final Transcript of BAH earnings conference call or presentation 3-Nov-11 2:30pm GMT

Booz Allen Hamilton Holding Corp Q1 2012 Earnings Conference Call Transcript – 2011-08-09 – $54.00 – Final Transcript of BAH earnings conference call or presentation 9-Aug-11 12:00pm GMT

Booz Allen Hamilton Holding Corp Q4 2011 Earnings Conference Call Transcript – 2011-06-07 – $54.00 – Final Transcript of BAH earnings conference call or presentation, 7-Jun-11 8:00am ET

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