Third Quarter Fiscal 2013 – Below is a summary of Booz Allen’s results for the fiscal 2013 third quarter and the key factors driving those results:
- Booz Allen’s 3.5 percent decrease in revenue in the third quarter of fiscal 2013 compared with the prior year period resulted from lower demand due to market forces leading to a reduction in headcount and a related reduction in billable hours which contributed to a decline in our direct labor. Additionally, the Company has a large portfolio of cost-reimbursable contracts, and our continued focus on minimizing non-billable work and effectively managing our non-billable costs has contributed to lower indirect costs and a corresponding reduction in revenue on these cost-reimbursable contracts.
- In the third quarter of fiscal 2013, Adjusted Operating Income increased to $120.8 million from $104.7 million in the prior year period, and operating income increased to $116.6 million from $98.2 million in the prior year period. The improvement in Adjusted Operating Income and operating income were driven by ongoing improvements in the deployment of Booz Allen’s consulting staff and disciplined management of the Company’s indirect costs which has led to higher margins on our fixed-price and time-and-materials contracts with no material impact to margins on our cost-reimbursable contracts.
- In the third quarter of fiscal 2013, Adjusted Net Income increased to $59.7 million from $56.4 million in the prior year period and net income decreased to $56.2 million from $62.9 million in the prior year period. Adjusted EBITDA increased 13.1 percent to $135.8 million in the third quarter of fiscal 2013, compared with $120.1 million in the prior year period. In the third quarter of fiscal 2013, Adjusted Diluted EPS increased to $0.41 from $0.40 in the prior year period; diluted EPS decreased to $0.38 from $0.44 in the prior year period.These metrics were positively impacted by the same factors as Adjusted Operating Income and operating income offset by an increase in income taxes, interest, and other expenses for the quarter ended December 31, 2012 as compared to the prior year period. Adjusted Diluted EPS and diluted EPS for the third quarter of fiscal 2013 reflect a decrease on the order of $0.04 per share attributable to higher interest expense associated with the July 2012 debt refinancing transaction.
- Earnings in the prior year period reflected a substantial increase attributable to the release of a significant income tax reserve in the quarter ended December 31, 2011. There were no substantial one-time costs or increases to earnings in the quarter ended December 31, 2012. Adjusted Net Income, Adjusted EBITDA, and Adjusted Diluted Earnings per Share remove these one-time and unusual items.
Booz Allen’s total backlog as of December 31, 2012, was $12.92 billion, which included $11.39 billion from Booz Allen and $1.53 billion from our acquisition of the Defense Systems Engineering and Support (DSES) division of ARINC Incorporated, compared with $12.22 billion as of December 31, 2011. Booz Allen’s funded backlog as of December 31, 2012 was $3.15 billion, which included $2.90 billion from Booz Allen and $247.3 million from DSES, compared with $2.97 billion as of December 31, 2011.