Booz Allen Hamilton Holding Corporation — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024. Although the request metadata refers to “2023 Q4,” this filing is an annual report for FY2024; the supplied text does not provide standalone fourth-quarter results.
Business context
Booz Allen provides consulting, technology, engineering, analytics, cyber and mission services. It operates as one reportable segment and is highly dependent on U.S. government work: 98% of FY2024 revenue came from contracts whose end client was a U.S. government agency or department. The company reported approximately 34,200 employees and 4,755 contracts and task orders; 95% of revenue was earned as prime contractor.
Financial results and liquidity
| Metric | FY2024 | FY2023 | Change / context |
|---|---|---|---|
| Revenue | $10.662 billion | $9.259 billion | Up 15.2% |
| Operating income | $1.013 billion | $446.8 million | Up 126.8%; operating margin 9.5% vs. 4.8% |
| Net income attributable to common stockholders | $605.7 million | $271.8 million | Up 122.9% |
| Diluted EPS | $4.59 | $2.03 | Up from prior year |
| Adjusted operating income (non-GAAP) | $1.065 billion | $899.6 million | Up about 18% |
| Adjusted EBITDA (non-GAAP) | $1.175 billion | $1.014 billion | Adjusted EBITDA margin on revenue was 11.0% in both years |
| Operating cash flow | $258.8 million | $602.8 million | Down 57.1% |
| Free cash flow (non-GAAP) | $192.1 million | $526.7 million | Down; defined as operating cash flow less property, equipment and software purchases |
| Cash and cash equivalents | $554.3 million | $404.9 million | At March 31 |
| Total debt | $3.412 billion | $2.812 billion | At March 31; no revolving-facility balance at year-end |
Management attributed revenue growth to strong demand and increased headcount. Operating income also benefited from contract performance and cost management. The prior year included a $350.0 million reserve related to the DOJ investigation, compared with a $27.5 million reserve in FY2024; therefore, the sharp GAAP operating-income increase is not solely indicative of underlying growth. Adjusted EBITDA margin excluding billable expenses was 15.9%, versus 15.7%.
Operating cash flow was affected by the $377.5 million DOJ settlement payment in FY2024, as well as working-capital movements, including higher receivables. The company reported total liquidity of approximately $1.6 billion: $554.3 million cash plus $998.7 million available on its revolving credit facility. Management expects cash, operating cash flow and revolver capacity to meet anticipated needs for the next 12 months.
Interest expense rose 44.3% to $172.9 million, reflecting higher rates and the $650 million 5.95% senior notes issued in August 2023, due 2033. Term Loan A was $1.588 billion at a 6.677% stated rate at year-end. The company had $550 million of interest-rate swaps and reported compliance with its debt covenants.
Material changes and operating indicators
- Revenue grew across U.S. government defense, intelligence and civil clients. Global commercial revenue fell to $173.2 million from $231.6 million.
- Defense revenue was $5.1 billion, intelligence $1.8 billion and civil $3.7 billion. The Department of Veterans Affairs was the largest individual client, representing 13% of revenue.
- Total backlog increased 8.4% to $33.8 billion: $4.8 billion funded, $9.5 billion unfunded and $19.5 billion in priced options. Backlog is not guaranteed revenue, particularly its unfunded and option components.
- Remaining performance obligations were $8.7 billion. The company expects to recognize approximately 70% over the next 12 months and 80% over the next 24 months.
- Contract mix shifted modestly: cost-reimbursable contracts were 55% of revenue, time-and-materials 24%, and fixed-price 21%.
- Client staff headcount increased, supporting growth but making timely hiring, deployment and utilization important to revenue and margins.
Outlook, risks and unusual items
The company describes its VoLT strategy—Velocity, Leadership and Technology—as focused on scaling technology-led mission businesses, including AI and cybersecurity. It does not provide specific numerical FY2025 revenue, earnings or margin guidance in the supplied filing text.
- Government exposure: Changes or delays in appropriations, shutdowns, debt-ceiling disputes, spending cuts, insourcing, shifting agency priorities and contract protests could delay or reduce work. Nearly all revenue is tied to U.S. government clients.
- Backlog conversion and execution: Task orders, funding, option exercise and staffing determine whether backlog becomes revenue. Fixed-price work also exposes the company to cost overruns; revenue estimates depend on judgments about costs to complete contracts.
- Government audits and reserve: The company recorded a $363.7 million liability for estimated adjustments to claimed indirect costs, up from $326.7 million. Audits and final resolutions remain ongoing for periods subsequent to FY2011, with potential effects on results and cash.
- DOJ settlement: The company paid $377.5 million in FY2024 to resolve civil claims concerning cost accounting and indirect-cost practices for April 2011–March 2021. The settlement included no admission of liability. The DOJ criminal investigation had closed, and the SEC concluded its investigation without recommending enforcement action.
- Tax matter: An unfavorable District of Columbia appeals ruling resulted in $42.7 million of FY2024 tax expense, including interest and penalties, net of federal benefit. The company also reported $13.2 million of incremental cash taxes paid in the fourth quarter.
- Cybersecurity and AI: The company identifies sophisticated cyber threats, sensitive-data exposure, evolving AI regulation and potential AI-related liability as risks. It reported no cybersecurity incident during the period that materially affected, or was reasonably likely to materially affect, its strategy, results or financial condition.
- Other risks: Talent shortages and security-clearance delays, inflation and labor costs, competition, regulatory compliance, interest-rate exposure and substantial indebtedness could affect performance. Ordinary-course legal proceedings were not expected by management to have a material adverse effect; no material litigation accrual was recorded at year-end.
- Capital returns: FY2024 dividends were $1.92 per share and the company repurchased 3.2 million shares for $372.8 million. After year-end, the board declared a $0.51 quarterly dividend and increased the repurchase authorization.
Most important facts for investors to verify
- Whether revenue growth and adjusted profitability persist after accounting for the prior-year DOJ reserve and FY2024 reserve reduction and other adjustments.
- Whether operating cash flow recovers after the settlement payment and working-capital outflows, especially growth in receivables.
- How much of the $33.8 billion backlog is funded and converts to revenue on schedule; priced options and unfunded backlog are uncertain.
- Whether ongoing government audits change the $363.7 million indirect-cost liability or lead to refunds, withholding or other adjustments.
- How the DC tax ruling, related tax positions and pending IRS audits affect future tax expense, cash taxes and claimed refunds.
- Debt-service capacity and sensitivity to interest rates, given $3.4 billion of debt, variable-rate borrowings and the 5.95% 2033 notes.
- Whether the company can retain and deploy cleared technical staff while maintaining contract margins and meeting cybersecurity and CMMC requirements.
The audited financial statements received an unqualified opinion, and management and the auditor concluded internal control over financial reporting was effective as of March 31, 2024.