Booz Allen Shares Rally On Margin Gains, Strong Cash Flow

Booz Allen Hamilton Holding Corp. (NYSE:BAH) shares traded higher Friday after the technology consultancy reported first-quarter fiscal 2027 adjusted diluted EPS of $1.81, beating the $1.49 estimate.

Revenue fell 4.2% year over year to $2.80 billion, missing the $2.82 billion estimate.

The stock’s gain appeared to reflect the earnings beat, 130-basis-point margin expansion, stronger cash generation and 3.2% backlog growth despite lower revenue.

Earnings, Margins, Revenue And Backlog

• GAAP diluted EPS declined 24.5% to $1.63, while net income fell 26.9% to $198 million. Adjusted net income rose 17.9% to $217 million.

• Adjusted EBITDA increased 7.4% to $334 million, and adjusted EBITDA margin expanded 130 basis points to 11.9%. The company cited strong contract execution and favorable investment-spending timing.

• Revenue declined primarily because slowed procurement reduced headcount and billable expenses.

• National Security revenue increased to $2.03 billion from $2.00 billion, while Civil and Commercial revenue fell to $772 million from $923 million. Total headcount declined to 30,900 from 33,400.

• Total backlog rose 3.2% to $39.48 billion, including a funded backlog of $4.66 billion. Quarterly book-to-bill improved to 1.5 times from 1.4 times.

Cash Flow And Capital

Operating cash flow increased to $281 million from $119 million, while free cash flow rose to $261 million from $96 million.

Booz Allen ended the quarter with $540 million in cash and $3.94 billion in total debt, resulting in a net leverage ratio of 2.7 times.

The company deployed $324 million toward acquisitions and strategic investments and returned $123 million to shareholders.

Other corporate expenses included acquisition-related costs tied to Defy Security and the agreement to acquire Ultra Mission Solutions.

Fiscal 2027 Outlook

Booz Allen affirmed fiscal 2027 adjusted EPS guidance of $6.00 to $6.35, versus the $6.29 estimate.

It maintained revenue guidance of $11.2 billion to $11.7 billion, compared with the $11.414 billion estimate. Free cash flow guidance remained $825 million to $925 million.

Guidance assumes a 20% to 23% adjusted tax rate and about $220 million in capital spending, including $105 million related to its new headquarters. The company is relocating its global headquarters from McLean to Reston, Virginia.

"Booz Allen is on track with the expectations we set for the fiscal year amid challenging market dynamics," CEO Horacio Rozanski said.

BAH Price Action: Booz Allen Hamilton shares were trading higher by 14.12% at $75.17 at the time of publication on Friday, according to Benzinga Pro data.

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