Booz Allen Hamilton Announces Fourth Quarter and Full-Year Fiscal 2016 Results

The Company achieved a return to annual revenue growth after three years of contraction, and projects continued revenue growth in fiscal 2017. Total backlog grew by 26.2 percent over the prior year to a record year-end high, and the book-to-bill ratio for fiscal 2016 was 1.45x, a six-year high.

"Fiscal 2016 was a turning point for Booz Allen as revenue began to grow again and we continued to transform our company under our Vision 2020 growth strategy," said Horacio Rozanski, President and Chief Executive Officer. "Clients across our defense, intelligence, civil, and global commercial markets understand that we bring the best people, capabilities, and solutions to their most important missions, combining our traditional strengths in consulting and domain knowledge with advanced skills in systems delivery, cyber, analytics and engineering. We are proud to once again deliver results that met or exceeded the financial outlook we provided at the beginning of the fiscal year."

The Company authorized and declared a regular dividend of $0.15 per share, payable on June 30, 2016, to stockholders of record on June 10, 2016.

Financial Review

Full Fiscal Year 2016 - Booz Allen's fiscal year runs from April 1 to March 31. A summary of the key factors driving results for the fiscal year ended March 31, 2016, is below:

• Gross Revenue was $5.41 billion, a 2.5 percent increase over the prior year. These results reflected increased client demand, which includes an increase in billable expenses, as well as the impact on cost reimbursable contracts from higher indirect spending. The growth in indirect spending for the year was primarily driven by increased marketing, administrative and bid and proposal activities in order to drive continued growth in fiscal 2017.
• Adjusted Operating Income decreased to $448.8 million from $465.1 million in fiscal 2015. The decrease was driven by higher indirect spending, partially offset by the release of certain provisions for the potential recovery of allowable expenses.
• Adjusted Net Income increased to $246.4 million, from $240.3 million in fiscal 2015. The increase was primarily the result of the decrease in Adjusted Operating Income, which was more than offset by a lower effective tax rate associated with the qualification of certain federal and state income tax credits.
• Adjusted EBITDA decreased to $506.1 million, from $523.5 million in fiscal 2015. This was driven by the same factors as Adjusted Operating Income.
• Diluted EPS increased to $1.94 from $1.52 in fiscal 2015, and Adjusted Diluted EPS increased to $1.65 from $1.60. The increase in Adjusted Diluted EPS was driven by the same factors as Adjusted Net Income, with an additional benefit from the reduction in diluted share count as a result of the repurchase of 2.1 million shares during fiscal 2016. The increase in Diluted EPS also was driven by the same factors as Adjusted Net Income, as well as the release of certain income tax reserves in the third and fourth quarters related to the 2008 acquisition of the Company.
• Net cash provided by operating activities in fiscal 2016 was $249.2 million and Free Cash Flow was $182.6 million. A decline in cash flow generation from the prior year was primarily the result of an increase in accounts receivable and an increase in capital expenditures on facilities and equipment.

As of March 31, 2016, total backlog was $11.8 billion, compared to $9.4 billion as of March 31, 2015, an increase of 26.2 percent. The majority of the growth is in priced options, which rose by 45 percent to $6.6 billion. The improvement in total backlog was due to greater investments in bid and proposal activity in a more stable government contracting environment.

Fourth Quarter 2016 - Below is a summary of Booz Allen's results for the fiscal 2016 fourth quarter and the key factors driving those results:

• Gross Revenue increased by 6.1 percent in the fourth quarter of fiscal 2016 compared with the prior year period, primarily as a result of increased client demand, which includes an increase in billable expenses.
• Adjusted Operating Income increased to $105.6 million from $93.6 million in the prior year period, driven by the same factors as Gross Revenue, as well as the release of certain provisions for the potential recovery of allowable expenses.
• Adjusted Net Income increased to $61.3 million, from $44.8 million in the prior year period. The increase was due to the same factors as Adjusted Operating Income, with the additional benefit of a decrease in the effective tax rate for fiscal 2016.
• Adjusted EBITDA increased to $119.4 million, from $108.0 million in the prior year period. The increase was driven by the same factors as Adjusted Operating Income.
• Diluted EPS increased to $0.43 from $0.29 in the prior year period, and Adjusted Diluted EPS increased to $0.41 from $0.30. The increase in Adjusted Diluted EPS was driven by the same factors as Adjusted Net Income.

Financial Outlook

For fiscal 2017, we expect revenue to increase in the range of two percent to five percent. At the bottom line, for the full year, we are forecasting diluted EPS to be in the range of $1.60 to $1.70 and Adjusted Diluted EPS to be on the order of $1.65 to $1.75.

These EPS estimates are based on fiscal 2017 estimated average diluted shares outstanding of approximately 150.0 million shares, and a 40.1 percent effective tax rate, which does not include federal and state tax credits for which qualification has not yet been established.

About Booz Allen Hamilton

Booz Allen Hamilton (NYSE: BAH) has been at the forefront of strategy and technology for more than 100 years. Today, the firm provides management and technology consulting and engineering services to leading Fortune 500 corporations, governments, and not-for-profits across the globe. Booz Allen partners with public and private sector clients to solve their most difficult challenges through a combination of consulting, analytics, mission operations, technology, systems delivery, cybersecurity, engineering, and innovation expertise.

With international headquarters in McLean, Virginia, the firm employs about 22,600 people globally, and had revenue of $5.41 billion for the 12 months ended March 31, 2016.

Exhibit 1 Booz Allen Hamilton Holding Corporation Consolidated Statements of Operations
			Three Months Ended March 31,								Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)			2016				2015				2016				2015
			(Unaudited)
Revenue			$	1,424,317			$	1,342,946			$	5,405,738			$	5,274,770
Operating costs and expenses:
Cost of revenue			680,650				664,882				2,580,026				2,593,849
Billable expenses			415,342				341,533				1,513,083				1,406,527
General and administrative expenses			208,898				228,544				806,509				752,912
Depreciation and amortization			14,919				15,427				61,536				62,660
Total operating costs and expenses			1,319,809				1,250,386				4,961,154				4,815,948
Operating income			104,508				92,560				444,584				458,822
Interest expense			(17,878		)		(17,288		)		(70,815		)		(71,832		)
Other, net			5,384				8				5,693				(1,072		)
Income before income taxes			92,014				75,280				379,462				385,918
Income tax expense			26,497				31,917				85,368				153,349
Net income			$	65,517			$	43,363			$	294,094			$	232,569
Earnings per common share:
Basic			$	0.44			$	0.29			$	1.98			$	1.58
Diluted			$	0.43			$	0.29			$	1.94			$	1.52

Exhibit 2 Booz Allen Hamilton Holding Corporation Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)			March 31, 2016				March 31, 2015
Assets
Current assets:
Cash and cash equivalents			$	187,529			$	207,217
Accounts receivable, net of allowance			892,289				857,310
Prepaid expenses and other current assets			109,953				84,142
Total current assets			1,189,771				1,148,669
Property and equipment, net of accumulated depreciation			130,169				111,367
Deferred income taxes			22,054				29,297
Intangible assets, net of accumulated amortization			220,658				219,382
Goodwill			1,361,913				1,304,231
Other long-term assets			85,606				51,036
Total assets			$	3,010,171			$	2,863,982
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt			$	112,813			$	57,063
Accounts payable and other accrued expenses			484,769				481,815
Accrued compensation and benefits			241,367				279,239
Other current liabilities			100,964				30,877
Total current liabilities			939,913				848,994
Long-term debt, net of current portion			1,484,448				1,555,761
Income tax reserves			1,517				58,444
Other long-term liabilities			175,805				214,285
Total liabilities			2,601,683				2,677,484
Stockholders' equity:
Common stock, Class A — $0.01 par value — authorized, 600,000,000 shares; issued, 153,391,058 shares at March 31, 2016 and 150,237,675 shares at March 31, 2015; outstanding, 147,992,462 shares at March 31, 2016 and 147,238,282 shares at March 31, 2015			1,534				1,502
Special voting common stock, Class E — $0.003 par value — authorized, 25,000,000 shares; issued and outstanding, 0 shares at March 31, 2016 and 1,851,589 shares at March 31, 2015			—				6
Treasury stock, at cost — 5,398,596 shares at March 31, 2016 and 2,999,393 shares at March 31, 2015			(135,445		)		(72,293		)
Additional paid-in capital			243,475				174,985
Retained earnings			318,537				104,457
Accumulated other comprehensive loss			(19,613		)		(22,159		)
Total stockholders' equity			408,488				186,498
Total liabilities and stockholders' equity			$	3,010,171			$	2,863,982

Exhibit 3 Booz Allen Hamilton Holding Corporation Consolidated Statements of Cash Flows
			Fiscal Year Ended March 31,
(Amounts in thousands)			2016				2015
Cash flows from operating activities
Net income			$	294,094			$	232,569
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			61,536				62,660
Stock-based compensation expense			24,992				26,163
Deferred income taxes			3,549				(2,543		)
Excess tax benefits from stock-based compensation			(31,924		)		(50,800		)
Amortization of debt issuance costs and loss on extinguishment			8,359				11,582
Losses on dispositions and impairments			547				1,541
Changes in assets and liabilities:
Accounts receivable			(31,229		)		60,533
Income taxes receivable / payable			(4,170		)		36,456
Prepaid expenses and other current assets			12,242				(1,591		)
Other long-term assets			(36,429		)		(8,240		)
Accrued compensation and benefits			(8,409		)		(44,329		)
Accounts payable and other accrued expenses			4,911				(35,443		)
Accrued interest			(2,829		)		5,262
Income tax reserves			(56,927		)		1,038
Other current liabilities			66,031				5,127
Other long-term liabilities			(55,110		)		9,973
Net cash provided by operating activities			249,234				309,958
Cash flows from investing activities
Purchases of property and equipment			(66,635		)		(36,041		)
Cash paid for business acquisitions, net of cash acquired			(51,118		)		(24,534		)
Net cash used in investing activities			(117,753		)		(60,575		)
Cash flows from financing activities
Net proceeds from issuance of common stock			5,977				5,020
Stock option exercises			7,962				6,099
Excess tax benefits from stock-based compensation			31,924				50,800
Repurchases of common stock			(63,152		)		(62,140		)
Cash dividends paid			(80,015		)		(215,094		)
Dividend equivalents paid to option holders			(31,802		)		(47,110		)
Repayment of debt			(295,063		)		(279,563		)
Proceeds from debt issuance			273,000				239,828
Net cash used in financing activities			(151,169		)		(302,160		)
Net decrease in cash and cash equivalents			(19,688		)		(52,777		)
Cash and cash equivalents — beginning of year			207,217				259,994
Cash and cash equivalents — end of year			$	187,529			$	207,217
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest			$	57,068			$	50,074
Income taxes			$	143,083			$	122,912

Exhibit 4 Booz Allen Hamilton Holding Corporation Non-GAAP Financial Information
			Three Months Ended March 31,								Fiscal Year Ended March 31,
(Amounts in thousands, except share and per share data)			2016				2015				2016				2015
			(Unaudited)								(Unaudited)
Adjusted Operating Income
Operating Income			$	104,508			$	92,560			$	444,584			$	458,822
Amortization of intangible assets (a)			1,057				1,056				4,225				4,225
Transaction expenses (b)			—				—				—				2,039
Adjusted Operating Income			$	105,565			$	93,616			$	448,809			$	465,086
EBITDA & Adjusted EBITDA
Net income			$	65,517			$	43,363			$	294,094			$	232,569
Income tax expense			26,497				31,917				85,368				153,349
Interest and other, net			12,494				17,280				65,122				72,904
Depreciation and amortization			14,919				15,427				61,536				62,660
EBITDA			119,427				107,987				506,120				521,482
Transaction expenses (b)			—				—				—				2,039
Adjusted EBITDA			$	119,427			$	107,987			$	506,120			$	523,521
Adjusted Net Income
Net income			$	65,517			$	43,363			$	294,094			$	232,569
Amortization of intangible assets (a)			1,057				1,056				4,225				4,225
Transaction expenses (b)			—				—				—				2,039
Release of income tax reserves (c)			(5,634		)		—				(53,301		)		—
Amortization or write-off of debt issuance costs and write-off of original issue discount			1,291				1,278				5,201				6,545
Adjustments for tax effect (d)			(939		)		(934		)		(3,770		)		(5,124		)
Adjusted Net Income			$	61,292			$	44,763			$	246,449			$	240,254
Adjusted Diluted Earnings Per Share
Weighted-average number of diluted shares outstanding			149,559,119				149,867,259				149,719,137				150,375,531
Adjusted Net Income Per Diluted Share (e)			$	0.41			$	0.30			$	1.65			$	1.60
Free Cash Flow
Net cash provided by operating activities			$	68,237			$	81,900			$	249,234			$	309,958
Less: Purchases of property and equipment			(20,806		)		(18,575		)		(66,635		)		(36,041		)
Free Cash Flow			$	47,431			$	63,325			$	182,599			$	273,917

(a)				Reflects amortization of intangible assets resulting from the Acquisition of our Company by The Carlyle Group.
(b)				Reflects debt refinancing costs incurred in connection with the refinancing transaction consummated on May 7, 2014.
(c)				Release of pre-acquisition income tax reserves assumed by the Company in connection with the Acquisition of our Company by The Carlyle Group.
(d)				Reflects tax effect of adjustments at an assumed marginal tax rate of 40%.
(e)				Excludes an adjustment of approximately $0.8 million and $3.5 million of net earnings for the three and twelve months ended March 31, 2016 respectively, and excludes an adjustment of approximately $0.6 million and $3.4 million of net earnings for the three and twelve months ended March 31, 2015 respectively, associated with the application of the two-class method for computing diluted earnings per share.

Exhibit 5 Booz Allen Hamilton Holding Corporation Operating Data
			As of March 31,
(Amounts in millions)			2016				2015
Backlog
Funded			$	2,673			$	2,691
Unfunded (1)			2,546				2,121
Priced Options			6,595				4,548
Total Backlog			$	11,814			$	9,360

(1)

Amount as of March 31, 2015 reflects a reduction by management to the revenue value of orders for services under one then existing single award ID/IQ contract the Company had for several years, based on an established pattern of funding under this contract by the U.S. government.

			Three Months Ended March 31,
			2016		2015
Book-to-Bill *			0.82		0.48

*

Book-to-bill is calculated as the change in total backlog during the relevant fiscal quarter plus the relevant fiscal quarter revenue, all divided by the relevant fiscal quarter revenue.

			As of March 31,
			2016		2015
Headcount
Total Headcount			22,583		22,540
Consulting Staff Headcount**			20,329		20,361

**

Consulting staff headcount as of March 31, 2015 has been adjusted to conform to the current quarter's internal realignment of certain personnel that are engaged in general corporate functions.

			Three Months Ended March 31,				Fiscal Year Ended March 31,
			2016		2015		2016		2015
Percentage of Total Revenue by Contract Type
Cost-Reimbursable (2)			50%		55%		51%		55%
Time-and-Materials			26%		24%		26%		25%
Fixed-Price (3)			24%		21%		23%		20%

	(2)		Includes both cost-plus-fixed-fee and cost-plus-award fee contracts.
	(3)		Includes fixed-price level of effort contracts.

			Three Months Ended March 31,
			2016		2015
Days Sales Outstanding ***			60		59

***

Calculated as total accounts receivable divided by revenue per day during the relevant fiscal quarter.