Ross Wilkers


Booz Allen CEO: Strongest market in 5 years

Booz Allen Hamilton is bullish on growth prospects for both its financial results and ability to boost headcount in support of that just as the uptick in federal budgets accelerates over the next four months.

During the firm’s fourth quarter and year-end fiscal earnings call Tuesday, CEO Horacio Rozanski called the current environment “frankly, for my money, one of the best markets we’ve seen at least in the last five years.”

The fiscal 2018 budget was signed in March, nearly six months late, which Rozanski expects to lead to a “very robust selling season, like we always do.”

“But there is a budget and we’re going to take full advantage of those opportunities,” Rozanski said. “With government funding now beginning to flow, we are seeing lots of opportunities across our contract and client base.”

McLean, Virginia-based Booz Allen’s guidance for its 2019 fiscal year forecasts revenue of $6.55 billion-$6.67 billion to show 6 percent to 8 percent growth from $6.17 billion for fiscal 2018, which ended March 31. Fiscal 2018 sales registered 6.3-percent growth.

Fiscal 2018 saw Booz Allen’s cross the $6 billion-sales threshold for the first time since they went public in 2010. The 2018 book-to-bill ratio was 1.39 -- contract awards added to backlog versus drawdowns from that to recognize revenue.

The firm also is looking at 5 percent growth in employee headcount for fiscal 2019 to support its expected growth, Rozanski said. Booz Allen added 1,300 new staffers in its most recent fiscal year, a 5.7-percent increase.

That growth trajectory will evidently not include a large acquisition for Booz Allen on par with what its peers Leidos and General Dynamics have done over the past couple years. It is not the first time Booz Allen has said scale is not a major driver of its deal strategy.

Chief Financial Officer Lloyd Howell said Tuesday that Booz Allen’s acquisition strategy will focus on the capability tuck-in variety that would follow its deals for SPARC, Aquilent and more recently Morphick. “Frankly as they have presented themselves… we haven’t seen assets that meet our standards,” he said.

This is the second straight year of a late budget being passed and signed, a departure from prior years of continuing resolutions that held federal funding at the prior fiscal year’s levels. Both scenarios have led to what has recently become a tradition of agencies spending most of their contracting obligations in the July-September period, or fiscal fourth quarter.

During the April round of earnings reports, CEOs largely indicated expectations that the late arrival of full appropriations would translate to a year-end spending spree by defense and intelligence agencies with respective 8-percent and 7-percent funding increases for both in the omnibus bill.

Civilian agencies may be slower to get funds out the door as they planned for cuts rather than the 9-percent increase from the omnibus. By comparison, defense and intelligence agencies have plans and processes in place to get funds on contract for their plus-up.

Rozanski said the Defense Department in particular has the “clearest strategic focus it’s had in the last few years” and is centered around three priorities: increasing warfighter capabilities, cooperation with allied partners and modernization.

That is also Booz Allen’s largest customer base, where they generated 45.9 percent fiscal 2018 revenue from, according to the firm’s annual 10-K regulatory filing. Another 24.2 percent of full-year sales came from contracts with intelligence agencies. Revenue in the federal civilian market made up for 26.7 percent.

National security agencies in particular appear to be where Booz Allen sees promise from its Vision 2020 strategy to position itself in places Rozanski described as “where technology meets mission” and where the firm’s “consulting heritage plays the strongest.”

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at Follow him on Twitter: @rosswilkers. Also connect with him on LinkedIn.

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