Booz Allen Hamilton Holding Corporation Q3 FY2026 earnings call

• Acknowledged Matthew Calderone's departure as CFO and Kristine Martin Anderson's interim CFO role. • Three priorities: - Reduce cost, navigating government shutdown and managing costs. - Accelerate transition to outcome-based contracting and product sales, e.g., divesting DARPA business and launching Velox Reverser. - Focus investments on growth vectors like cyber, national security, partnerships, and AI, including partnership with a16z and expanding national security portfolio.

No detailed breakdown of product segments by revenue contribution provided in the transcript.

• Revised fiscal year 2026 guidance: revenue expected between $11.3 billion and $11.4 billion. • Adjusted EBITDA range of $1.195 billion to $1.215 billion. • ADEPS guidance raised to $5.95 to $6.15 per share. • Free cash flow expected between $825 million and $900 million.

• Uncertain macro environment. • Government shutdown impact on funding and awards. • Competitive market changes and potential new competitors.

Q: As we think about the end market expectations for FY 2027, is it fair to characterize Defense and Intelligence as growing with civil flat? And then essentially, when do you expect the downdrafts to lift on Civil in FY '27?

A: Horacio Rozanski responds about strong execution, national security growth, civil business beginning to reignite with pipeline growth.

Q: In terms of the kind of multiyear civil setup, can you maybe kind of talk to it?

A: Kristine Martin Anderson talks about civil changing with modernization, focus on cloud, AI, and specific missions.

Q: How much of the cost reduction plan is yet to unfold?

A: Matthew Calderone says cost actions' full impact on profitability will be felt next fiscal year.

Q: Talk about how things have picked up with respect to the pace of contract award activity.

A: Kristine Martin Anderson and Horacio Rozanski discuss awards picking up, especially post-shutdown, and focus on growth vectors.

Q: Civil business was down 28% in the quarter, how much tied to shutdown?

A: Kristine Martin Anderson says civil was a year of reset, starting to see turn now.

Q: Biggest changes in selling to government, like commercial partnerships and outcome-based contracting?

A: Horacio Rozanski talks about commercial partnerships and outcome-based contracting trends.

Q: Organic revenue growth vs headcount growth, and pricing pressures on civil recompetes?

A: Matthew Calderone says yes, efficiency and tech leverage will drive organic growth outpacing headcount.

Q: Defense budget outlook and preparation?

A: Horacio Rozanski talks about preparing for defense budget changes, investing in growth vectors.

Q: Funded backlog and growth in FY '27?

A: Kristine Martin Anderson talks about awards accelerating and momentum for next fiscal year.

Q: Competition from new players and commercial competitors?

A: Horacio Rozanski talks about unique ecosystem and teaming with tech companies.

Q: Tactical selling and civil recovery?

A: Kristine Martin Anderson talks about on-contract growth and encouraging signs.

Q: Golden Dome role?

A: Horacio Rozanski talks about active pursuit of opportunities in Golden Dome.

Q: Interplay of defense growth and civil fiscal restraint?

A: Horacio Rozanski and Kristine Martin Anderson talk about enduring civil missions and changing focus.

Q: Capital deployment and balance sheet?

A: Horacio Rozanski talks about strategic M&A, dividends, and share repurchases.