Booz Allen raises fiscal 2027 adjusted EPS guidance as quarterly profit rises

Booz Allen Hamilton Holding Corporation (BAH) said Friday it raised its fiscal 2027 adjusted diluted earnings-per-share guidance, even as second-quarter revenue fell 3.9% from a year earlier.

The advanced technology company released its results in a press release attached to a regulatory filing. The results cover the quarter ended Sept. 30.

Here's how the company did:

• Revenue: $2.78 billion vs. $2.89 billion a year earlier
• Net income: $181 million vs. $175 million a year earlier
• Diluted EPS: $1.50 vs. $1.42 a year earlier
• Adjusted diluted EPS: $1.76 vs. $1.49 a year earlier
• Adjusted EBITDA: $313 million vs. $324 million a year earlier

Adjusted diluted EPS rose 18.1% in the quarter, while GAAP diluted EPS rose 5.6%. The adjusted measure excludes acquisition amortization and other corporate expenses, the filing said.

Net income rose 3.4% to $181 million. The filing attributes that mainly to lower income tax expense and an additional $10 million gain from an earnout tied to contracts sold in the fourth quarter of fiscal 2026.

Those gains were partly offset by professional fees tied to acquisitions, lower revenue and higher amortization from acquisitions.

Adjusted EBITDA fell 3.4% to $313 million, while its margin on revenue rose 10 basis points to 11.3%. Other corporate expenses excluded from that figure totaled $17 million in the quarter.

Free cash flow was $263 million, down from $395 million a year earlier. Net cash from operating activities fell 30.2% to $294 million, which the filing attributes primarily to reduced revenue volume, partly offset by working capital management.

For the six months ended Sept. 30, revenue was $5.58 billion, down 4.1%. Adjusted diluted EPS rose 20.2% to $3.57, while net income fell 15.0% to $379 million.

Guidance

The company raised its adjusted diluted EPS outlook for fiscal 2027 to $6.50 to $6.70, from $6.00 to $6.35.

Other lines were also reset. Revenue is now expected at $11.3 billion to $11.6 billion, from $11.2 billion to $11.7 billion, with revenue growth of 1.0% to 3.0%, from 0% to 4.0%.

Adjusted EBITDA is now expected at $1,260 million to $1,290 million, from $1,240 million to $1,290 million, at a margin of about 11%, the same as before.

Free cash flow is now expected at $850 million to $925 million, from $825 million to $925 million. The outlook assumes an effective tax rate of 16% to 19%, 118 million to 120 million average diluted shares and capital expenditures of about $200 million.

Chairman and CEO Horacio Rozanski said, "Booz Allen is executing exceptionally well and investing in our next phase of growth." The company is also building and scaling its cyber and defense technology products.

Segments and backlog

National Security revenue rose to $2.08 billion from $2.06 billion. Civil and Commercial revenue fell to $702 million from $827 million.

The company now includes Defense and Intelligence customers in National Security, which it previously reported separately, and recast the prior-period figures.

The earnings presentation said National Security revenue excluding billable expenses rose 5.9%. The filing attributes the overall revenue decline primarily to a slower start to programs this year, mostly with civil customers, after a slowed procurement environment in the prior year.

Total backlog stood at $41 billion, up 1.9% from a year earlier. Funded backlog was $5.71 billion, against $5.44 billion.

The quarterly book-to-bill ratio, which measures net new orders against revenue, was 1.5x, down from 1.7x a year earlier. The trailing twelve-month ratio held at 1.1x.

Headcount and capital

Total headcount was about 31,000 as of Sept. 30, down from 32,500 a year earlier, the filing said. Customer staff headcount was 28,200, down from 29,600.

Capital deployment totaled $965 million in the quarter. The earnings presentation said $795 million went to M&A and strategic investments, and $170 million was returned to shareholders.

The net leverage ratio was 3.3, up from 2.5. Total debt was $4,410 million, against cash of $334 million.

In the six months, payments for business acquisitions and dispositions, net of cash acquired, totaled $934 million. The filing lists acquisition-related costs tied to Defy Security, which closed in the first quarter of fiscal 2027, and to the Ultra I&C Mission Solutions business in the second quarter. The filing does not give a purchase price for the Ultra I&C business.

A regular quarterly dividend of $0.59 per share will be payable Dec. 4 to stockholders of record on Nov. 12.