Good morning, and thank you for joining us for Booz Allen's First Quarter Fiscal Year 2024 Earnings Call. We hope you've had an opportunity to read the press release we issued earlier this morning. We have also provided presentation slides on our website and are now on Slide 2. With me today to talk about our business and financial performance are Horacio Rozanski, our President and Chief Executive Officer; and Matt Calderone, 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 involve known and unknown risks, uncertainties and other factors that may cause our 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 measures and other metrics, which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our first quarter fiscal year 2024 earnings release and slides. It is now my pleasure to turn the call over to our CEO and President, Horacio Rozanski. We are now on Slide 4.

Thank you, Nathan, and good morning, everyone. Thank you for joining the call. This morning, Matt and I are excited to share outstanding financial results for the first quarter of fiscal year 2024. Our business is performing extremely well across all metrics. In the first quarter, revenue grew 18% year-over-year, with industry-leading organic growth. The bottom line was exceptional, and our headcount grew at a record pace to more than 32,000 Booz Allen employees. I believe these numbers speak for themselves. I could not be more proud of our people for delivering a truly tremendous first quarter, as we advance our VoLT strategy and serve our clients' most critical missions. This morning, I will put the results in context of our investment thesis and current year outlook. Then I'll discuss how our people and culture are foundational to our sustained performance. And later, Matt will cover the first quarter results and expectations for the full fiscal year in depth. Before I go on, as you know, on July 21, we announced settlement of the U.S. Department of Justice Civil investigation into highly technical elements of our government cost accounting and indirect cost charging practices. The settlement is within the expected range we previously disclosed in our fourth quarter earnings in May and has been factored into our updated cash guidance. We believe the company acted lawfully and responsibly. The settlement provides certainty to our employees, clients and shareholders and allows us to return to regular order with the important work of our DCMA and DCAA regulators. And yesterday, the SEC informed us that they had concluded their investigation into Booz Allen. Returning to this quarter's performance. As always, - it is important to view our latest results in the context of long-term objectives. Our multiyear investment thesis centers on growing…

Thank you, Horacio, and thanks to all of you for joining us on today's call. As Horacio noted, we are extremely pleased with our start to the fiscal year. Given the momentum in our business, we anticipated that we would come out of the gate strong. On our last call, I indicated that our first quarter growth would be at or above the top end of our guided range. As these numbers demonstrate, our team exceeded these expectations. Thus, while it is early in the year and significant funding uncertainty remains, we are very well positioned against our fiscal 2024 guidance, and we remain on track to deliver on our multiyear investment thesis objectives. Now, please turn to Slide 6 as I cover our first quarter results in detail. Total revenue for the quarter grew 18% year-over-year to approximately $2.7 billion. Organic revenue was up 16.7% year-over-year, including double-digit growth across all of our federal markets. Revenue excluding billable expenses grew 16.9% to approximately $1.8 billion. This is our strongest growth quarter since we went public in 2010. Our VoLT strategy has positioned us well in areas that are primed for long-term growth. Our Defense business continued to accelerate in the first quarter, with revenue increasing approximately 19% year-over-year. In Defense, we remain focused on bringing differentiated scaled solutions to the war fighting mission. In Civil, revenue was up approximately 20% year-over-year. We continue to position ourselves as a critical partner in the federal digital transformation. Our Intelligence business grew by approximately 18% year-over-year, including several exciting new wins and a healthy pipeline of opportunities. We continue to expect the pace of revenue growth in Intel to slow over the balance of the fiscal year due to challenging year-over-year comps and the roll-off of a large classified contract. Finally, our…

Thank you. [Operator Instructions] And our first question coming from the line of Sheila Kahyaoglu with Jefferies. Your line is open.

Hi. Good morning, Horacio and Matt. Thank you so much.

Good morning, Sheila.

Good morning.

Morning. I don't know if you guys are going to like my question here, but obviously, stellar results on the revenue and profit line. So nothing to talk about there. But I just wanted to ask about the DOJ settlement. And how you think about -- Matt, you mentioned some comments about the fiscal '24 guide. But aside from that, do you think it impacted your ability to win business? It doesn't seem like it from the organic growth you've put up, but how do you think it's impacted your business or cash generation over the last few years?

Thanks for the question, Sheila. I mean the specific answer to your question is we remain very close to our clients. We connect with them all the time. We've been very transparent throughout about all of these and our clients understand it and have put it into context. So I don't believe, and I think the numbers would bear out that this has affected our ability to win business or to execute our business, and we're now able to look ahead. I mean, I think to put the whole thing in context, we just had a record quarter. We're extremely pleased with that. And I think it is a reflection in some ways of how much upside there is in our business when we have a stable environment on the labor side and on the funding side. I think there's two underlying drivers there. The first one, which I spoke to in the prepared remarks is, of course, our people who are at the heart of everything. And the second is that for over a decade, from Vision 2020 now to VoLT, we've been positioning against key issues that matter to our clients the most. I've talked in recent calls about China. I've talked about AI where you're going to see us talk more about Quantum and other things coming forward. And so that's how we're seeing the business. We're looking ahead. We're excited and optimistic. And we love this virtuous circle that we can create when amazing people do great work, clients ask for more. So we grow that allows us to invest in attracting more amazing people and then building new capabilities and the like. So that's - hopefully, that answers your question.

Yes. No, super helpful.

I was going to answer the cash portion of your question, Sheila. As Horacio said, we are very much looking forward to getting back to normal course with our DCMA and DCA colleagues. And over time, I do believe that we'll have a benefit to our cash performance. As you others have noted, there is a meaningful unbilled sitting on our balance sheet right now, and we look forward to working with our regulators to work through outstanding audits and get back to normal course.

Great. And I just wanted to ask about Civil as well. I mean it continues to lead growth of 20% off of a double-digit comp. So we got to see Helix, is there any one particular program driving that growth? Or is that just your AI capabilities coming through? If you could talk about that a bit.

Sure. I'll start. What's powered the Civil growth now for several years is the emphasis on digital transformation across multiple civil agencies, a lot of emphasis on the health agencies, not just the VA but also CDC, NIH, CMS and the like. And so - that continues to be a big growth engine. We're seeing really at this point, growth across our entire civil portfolio really driven, first of it was cloud and digital transformation. We're now seeing more demand for cyber for AI. And all of that comes together because we bring both the mission and the technology aspects together in ways that our clients value and we believe nobody else can.

Okay. Thank you.

Thank you. One moment please for our next question. And our next question coming from the line of Bert Subin with Stifel. Your line is open.

Good morning.

Good morning.

Hey, Horacio, just following up to your comments there, you said you're seeing more interest in AI on the Civil side. As we think about your comments from last earnings call, have you seen any marked change in AI interest from customers? And if so, where is that coming from? Is it Civil, Intel, Defense or some combination?

I think the short form of the answer is all of the above. This is a topic that, as you know, we've been investing in and thinking about for years. At the beginning, there was sort of, I'll call it more curiosity than interest, then you turn to interest, then it turn into demand. Our AI team is growing extraordinarily fast. And it's - this is permeating really the entirety of our business, I can't say this with absolute precision, but essentially, all of our largest contracts have some form of AI in scope or the possibility for AI in scope, I don't think our visionary clients who write a 5 or a 10-year contract now that does not include these capabilities because we all know they're transformational. And Booz Allen, I'm proud to say, is at the forefront.

Great. And just following up, Matt, to some of your comments there around guidance. You achieved 30% of the midpoint of your FY '24 ADEPS guide in the first quarter which compares to 25% last year. As you mentioned, sort of those three items, which of those are you most focused on to hitting or beating your guide? Is it mainly the bookings side this quarter as you lose the Intel contract later in the year? Or are there other discrete headwinds you're watching?

Yes, I'll pick two of the three. It certainly Q2 sales is critical. It's - as we said in the script, it's important every year, particularly this year, given the second item I'll highlight, which is the funding uncertainty. And really, our Q2 sets us up not just for this fiscal year but for next fiscal year as well. And that's what we're trying to do, not just on the bookings side, but obviously, with headcount as well as produce the year-over-year organic growth that we desire and our investors expect.

Great. Thank you, Matt, and thank you, Horacio.

Thank you.

Thank you. And our next question coming from the line Matt Akers with Wells Fargo. Your line is open.

Thanks for the question. Good morning. I wanted to ask about how you're thinking about capital deployment kind of as we go through this year, obviously, the settlement is a little bit of a drag on cash and how you think about maybe balancing that with maybe using the balance sheet to continue repurchases?

Yes, Matt, I'll start and Horacio may add to it. Certainly, it's a significant payment. So of course, it has an impact. But that said, we're still very much committed to using the balance sheet to drive incremental strategic and financial value. We have the balance sheet strength to do that and organic performance on the EBITDA side certainly fortifies that. Strategic acquisitions remain our priority. But as we've said, that [ph] market remains challenging. We're leaning into it. We've got a good pipeline that we're prosecuting, but deals are harder to consummate. I'm sure you've heard, not just from us, but from others that a lot of deals are dying at the finish line, but we're going to continue to lead into it. That said, we have the flexibility to deploy capital in other ways, it's appropriate to create shareholder value. And I think you saw that last quarter, we bought back a lot of shares.

Great. Thanks. I leave it there. Thank you. Operator Thank you. And our next question coming from the line of Robert Spingarn with Melius Research. Your line is open.

Thanks. Good morning. Horacio, we talk about AI all the time. It's already come up a bit on this call. How are you using AI internally to improve the cost structure or wherever else you can apply it at Booz?

I appreciate that question. And this has been an actual -- a fair amount of discussion internally because it's important to us. Our clients ask us the same question. And so we are looking for the highest opportunity areas where AI would have the most leverage to our business. And the obvious one is talent acquisition. And so we began by using a somebody else's tool that we purpose into our environment to go through all of our requisitions and make sure that it essentially read all the requisitions for bias language for things that we didn't want to have in there and to make us be the right kind of face to the market. And we've now moved into another phase, which is for matching. As you know, we have thousands of open requisitions at all times. They change all the time. We have hundreds of thousands of resumes coming in. We have 32,000 people internally who want to expand what they know in their career. And AI is an extraordinary tool to do that. We have something in prototype that is showing tremendous upside. And I think it's going to be really the next wave of our value proposition to really help our people understand this is where I want my career to go, what kinds of opportunities are out there that get me there? What kind of training do I need to have to connect into those opportunities and be qualified to do it that there's a ton of upside there. And then beyond that, as you can imagine, every aspect of our business, we need to think through. And again, we're prioritizing high leverage areas first.

Thank you. That's helpful. And then just in terms of the award environment as we look out through the year, I think you talked about Intel coming down. But are there any major recompetes that we should be aware of that might point you to the low end or the high end of your range and at the same time, any big opportunities that we should be on the lookout for?

It's the answer I guess would be yes on both sides of it. Our portfolio, as you've known us for a long time, it used to be so many small contracts and very few large ones. And now the portfolio has still a lot of small contracts and a lot of small task orders into the thousands and a significant share of really large programs. On the large program side, we - those when they get recompeted, each - any one of those can move the needle some. What we're seeing there is that recompetes come in generally a larger scope and even larger ceiling than the original programs. So that's obviously a source of upside, and it's a source of increased competition because they attract more attention. And our pipeline is rich. We have a good number of recompetes over the next 12 to 18 months. We have a very good number of things were going at that are either new or potential takeaways. And all in all, we're optimistic about where we are and how we're positioned.

Something specifically...

In addition to what we're seeing from a book-to-bill perspective, we're seeing significant demand from inside existing contracts, particularly in our Civil business. So that's a dynamic that as we produce a tremendous value for clients, we're seeing additional tasking on existing contracts at a pace, quite frankly, we haven't seen in the past.

Okay. So there's nothing specific either of you would call out, though?

There's large contracts being competed all the time. We have a couple of large contracts in health that are up for competition. We have a couple of large contracts in our Defense business they are up for recompete. And obviously, we're tracking those very closely. We're well positioned if we lost any of those. Obviously, that would not be good. But at the same time, where we have a number of very large, very exciting contracts that were awaiting word on and so forth. So -- on balance, as we think about the business, we think about contract vehicles, obviously, they're important, but we think about them as a means to an end and the end is to really serve the mission. And to create overlap between these contracts when we can so that we are actually well positioned to continue to serve a mission if we lose part of the scope because of a contract going away, if we win something our commitment is to the mission and to continue to grow into the missions that matter.

Right. Well, you've certainly managed it well so far. Thanks for the color.

Thank you.

Thank you. And our next question coming from the line of Cai von Rumohr with Cowen. Your line is open.

Hello. So I'm a little confused. Your headcount went up 2% in the quarter. That's an almost unprecedented first quarter increase. And the top end of your guide assumes that revenues over the next three quarters will average $110 million less than the first quarter. And per your 10-K focus Fox [ph] was only about $55 million to $60 million a quarter run rate. So it looks like either you have too many people on board or your revenue guide has to come up?

Cai, I'll take that one. Look, we had an exceptional Q1. We knew it was going to be strong. And as both Horacio and I said, it exceeded expectations, and it positions us very, very well within our guided range. And we are seeing, as Horacio said, significant momentum in the business across all three sectors on both the supply and demand side. It is early. We do want to see how Q2 plays out. There is, as you know, significant uncertainty in the funding environment that remains. And as I'm sure you know, our comps do get harder. We've generated 2% to 3% headcount growth each quarter for the last quarter, four quarters, which is really unprecedented. We're not going to replicate that. Utilization spiked in Q2, Q3, we added ever watch. There are a handful of reasons why I think the year-over-year comps get more challenging. But none of this should take away from the underlying momentum that we see. We're just going to see the pace of growth moderate some over the back half.

Yes, Cai, just to be very specific, we have not over hired. Our team is fully utilized, and we are leaning forward.

Great. And the second one is now that the DOJ uncertainty is behind you. Any thoughts about kind of taking on some more permanent debt and reducing the exposure of the term?

Cai, we're always looking at opportunities to revise our capital structure.

Thank you.

Thank you. And our next question coming from the line Louie DiPalma with William Blair. Your line is open.

Hi, Louis. Good morning. We can hear you.

Louis, your line is open. Your might be on mute. Sorry, you might be having some cell phone issue. I'm not showing any further questions. I will now turn the call back over to Mr. Rozanski for any closing remarks.

Thank you very much, and thank you all for your questions and for taking the time to join us this morning. As we close today, I'd like to once again recognize this incredible Booz Allen team. They are the reason that I feel so optimistic about our future. So if you'll allow me for a moment, let me take a second to just say to all my Booz Allen colleagues, thank you. Thank you for your hard work and for all that you do. Your passion and your commitment are truly all inspiring. And to everyone on the call, thanks once again for joining us. Have a great day, and enjoy the rest of the summer.

Thank you. Ladies and gentlemen, that does conclude conference for today. Thank you for your participation. You may now disconnect.