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The call balanced strong operational and financial resilience against meaningful near‑term revenue headwinds. Positives include expanded profitability (adjusted EBITDA and margin expansion), robust free cash flow, backlog growth, increased outcome‑based opportunities (OTAs), product acceleration (Vellox, EdgeXtend), and sizable national security awards (BEATS, Golden Dome). Negatives center on steep Civil revenue declines (‑23% in Q4), overall revenue contraction (Q4 down 6.4%), a choppy funding/procurement environment, and a more cautious first half of FY27. Management emphasizes cost discipline, productivity gains and targeted investments in cyber and defense tech, and provided a measured FY27 guide that assumes gradual improvement. Overall, the positives on profitability, cash generation, backlog and strategic repositioning are offset by material near‑term top‑line pressure in Civil and funding timing risk.
Booz Allen guided fiscal 2027 revenue of $11.2–$11.7 billion (recent M&A roughly net neutral), adjusted EBITDA of $1.24–$1.29 billion (implying ~11% adjusted EBITDA margin), adjusted EPS of $6.00–$6.35 (guidance excludes strategic venture impacts; FY26 included $0.11/ share of unrealized gains), and free cash flow of $825–$925 million (includes Reston HQ spend; excludes a $170 million IRS refund now expected in FY2028). Management expects national security to grow mid‑single digits while Civil declines high‑single digits (Q1 is the low point with sequential improvement), and cited a FY26 backlog of >$38 billion (funded backlog $4.3 billion), trailing 12‑month book‑to‑bill of 1.1x (Q4 book‑to‑bill 0.9x; nearly 1.2x including the MCTP award under protest), Q4 net bookings $2.5 billion, and $1.7 billion of Q4 awards. For context, FY26 results included revenue of $11.2 billion, adjusted EBITDA $1.2 billion (11% margin), adjusted EPS $6.51, free cash flow $951 million; Q4 revenue $2.8 billion (-6.4% YoY), Q4 adjusted EBITDA $309 million (11.1% margin), Q4 adjusted EPS $1.78; liquidity was $2.2 billion, cash $728 million, and net leverage 2.6x.
Fiscal 2026 adjusted EBITDA of $1.2B with an adjusted margin of 11%; Q4 adjusted EBITDA $309M and margin 11.1%, up 50 basis points year‑over‑year. Adjusted diluted EPS for the year $6.51 and Q4 ADEPS $1.78, up roughly 11% year‑over‑year.
Fiscal 2026 free cash flow of $951M and Q4 free cash flow of $212M. Deployed $1.1B of capital during FY26 and $366M in Q4 (including $219M strategic investments and $147M of shareholder returns). Ended Q4 with $728M cash and $2.2B total liquidity.
Backlog > $38B at year end, up about 3% year‑over‑year. Trailing 12‑month book‑to‑bill of 1.1x (Q4 book‑to‑bill 0.9x; would have been nearly 1.2x including the MCTP award under protest).
Significant traction in outcome‑based work: ~90% increase in OTA proposal submissions and ~50% increase in OTA awards year‑over‑year. Launched and accelerated product lines (Vellox suite, EdgeXtend) and completed strategic M&A (Defy Security) to scale cyber product sales.
National security portfolio grew 1.6% year‑over‑year in Q4. Won $1.7B of work in Q4 and secured major awards including the BEATS contract (~$937M single‑award) and an OTA on the Golden Dome space‑based interceptor prototype work.
Headcount down ~12% in the quarter while revenue per employee increased ~6%, reflecting productivity gains. Executed cost reduction program (target ~$150M annualized) with ~1/3 realized in FY26 and the company retaining ~40% of net savings on average.
FY27 guidance provided: revenue $11.2B–$11.7B (0%–4%), adjusted EBITDA $1.24B–$1.29B (~11% margin), ADEPS $6.00–$6.35, and free cash flow $825M–$925M — signaling stability and modest upside while accounting for near‑term headwinds.
Good morning. Thank you for standing by, and welcome to Booz Allen Hamilton's earnings call covering Fourth Quarter Fiscal Year 2026 Results. [Operator Instructions]. I'd now like to turn the call over to the Head of Investor Relations, Dustin Darensbourg.
Thank you. Good morning, and thank you all for joining us for Booz Allen's Fourth Quarter Fiscal Year 2026 Earnings Call. We hope you've had an opportunity to read the press release we issued earlier this morning. We also have provided presentation slides on our website and are now on Slide 2. With me today to talk about our business and financial results are Horacio Rozanski, our Chairman and Chief Executive Officer; Kristine Martin Anderson, President and Chief Operating Officer; and Troy Lahr, Executive Vice President and Chief Financial Officer. As shown on the disclaimer on Slide 3, please keep in mind that some of the items we will discuss this morning are forward-looking and may relate to future events or future financial performance, and may involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from forecasted results discussed in our SEC filings and on this call. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements and speak only as of the date made. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise.
During today's call, we will also discuss some non-GAAP financial ...