Those risks and uncertainties include among other things, general economic conditions, the availability of government funding for our company services and other factors set forth under the forward-looking statements disclaimer in our SEC filings.We caution you not to place undue reliance on any forward-looking statements we may make today and remind you that we assume no obligation to update or revise the information discussed today. We will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information to investors. We include an explanation of the adjustments and other reconciliations to our non-GAAP measures to the most comparable GAAP measures in the latest earnings release and 10-K filed with the SEC. It is now my pleasure to turn over to Ralph Shrader, our Chairman, Chief Executive Officer and President. Ralph? Ralph Shrader Good morning, and thank you, Curt. I was afraid, I had to read that and ask the test before I could actually today. So I’m glad to know we got that out of the way. Again, I want to welcome everybody here. We are very happy to have as a part of our inaugural Investor Day. We’ve been public company for little bit more than a year now. It’s been interesting and exciting journey. I’m not sure when we get into this. We were expecting all the ups and downs, and bouncing around but it has taken place over the course of the past year, but it has been a very interesting trip for us and uncertainly one that I think we’ve done very well. We’ve now had four earnings calls that we reported out on and each time, I think, we’ve been able to report out very positive results. So we take I think great pride that despite the fact that this has been a very challenging time in the challenging market that we’ve continued to perform well.
And I don’t believe that’s an accident. I believe it something that we’ve been laying the foundation for a long time. That little opening then yet that you saw is something that actually reaches back to our days when we sponsored the local PGA Golf Tournament here in D.C., the Booz Allen Classic and its about the only time in our history we’ve ever actually formulated an advertisement.But I think what’s captured in that advertisement is really sort of the heart and soul, and the essence of us as the firm. We are about people. We are about ideas. We are about creativity. We are about ingenuity. And we are about serving clients. That’s what we do. And I think despite the fact that there are challenging times out there, that there is always going to be a need for what it is we do and the way we do it. And that’s not just an empty statement on my part but rather it’s a reflection of the history that we’ve had. We’ve been around for a long time. We’ve seen a lot of turmoil in years past, in terms of the marketplace, government spending cycles, ups, downs, war build ups, war build downs, peace dividends and everything else, and yet, through all these period of time Booz Allen has continued to perform well. And again, I think, that’s because of who we are, what we are and how we’ve gone about doing the things that we do. Our whole operating model and our culture are geared around serving clients. I tell people that the most important thing that we’ve gained from our long history, probably, this idea that as consultants, what we do, is serve client, whilst other firms, who work in our marketplace, who talk about performing on contracts for customers. There is a fundamental difference in that.
Last night we had a partner meeting here in this room, we gathered together, the 100 or so internal folks that are our senior people. And we talked about where we are, where we are going, some of the challenges ahead, let me broke up into some smaller groups, that actually meet with the partners and I participated in one of those groups, in fact, Karen and I were together in a small group.And I asked our folks. I said, we take great pride in talking about ourselves and saying we are differentiated. Is that true? You are out there talking to clients everyday, did they feel like we are differentiated. And there was really quite gratifying to me to see this entire group of people stand up, and yes, let me tell you my story. I was talking to a client last week and we were talking about the challenges they were looking at but, what did they value in Booz Allen. We value the fact that when we need extra help. You can bring people in. It’s just instant. You can roll in the expertise that we need. We need to do this with extra focus on this, the deep dive. You can get the resources in here. We have change in focus that we need to shift people around, you guys do that. You folks seem to here all the time, worrying about my problem. One of the things that we remember from our past was being told that, probably the most important differentiator about Booz Allen was client who tell us, your people make my mission, your mission, and you own the mission, and you work with us, and your real goal is to actually satisfy our requirements in a way that makes us successful. And I say, this goes back to the fact that we’ve grown up as management consultant, that’s what we do, is we serve client, and that’s a very same thing distinguishes us today and differentiate us in the marketplace, is our ability to do that and do that well.
Now that just not an ideal bit of chatter, if we look at where we are today and where we’ve been, as we reported out in our last earnings call. We are beneficiaries of a record backlog.So despite all the turmoil that we went through and the government past fiscal year and all of this, somewhat unprecedented debates and discussions about the budget and trying to get the budget approved. We finally had funding resolution in the late spring. We were able to work through the summer to be able to convert this funding into backlog for us and that backlog stood at a very high level. And now we are in the process of working off with that backlog and generating the revenue that’s associated with having that funding available to us in-house. And our strategy, I think is a very simple strategy, yet, one that’s very, very difficult to implement. The journey that we’ve been on for the last 15 plus year; really focuses on this phrase, if we want to be the best, we are not concern with who the biggest is. We are not there chasing revenue. We are not about there chasing each job. We are out there looking to be able to do things that actually fit us, that fit into our sweet spot. We continue to build our reputation and our capability around. We are the very best firm that works in these markets. We spend a considerable amount of time at the leadership team level. The group that you are going to be hearing from today, talking about, what market we should be in? How we should focus in those markets? Where we should spend our investment money? What are the markets we should consider moving out? How do we keep our focus shifted and focus in a way, so that we are doing the right thing for the right people, not only to satisfy them, but to satisfy around internal aspirations to be able to work at the cutting edge, and be able to be part of that elite group of folks that can solve the toughest problems. So that’s how we spend our time and we spend our attention.
Now, we’ve created an operating model and a culture that supports that and that’s also very important. You can’t just declare that you want to do these things and do not have the internal infrastructure and support mechanism enable you to do that.And key thing for Booz Allen is the fact that we face everything on a single P&L. So we collect up this entire enterprise into one P&L. You are going to hear from some of our very important and key leaders today that all have responsibilities within that P&L, but they are not worried about their piece as much as what’s going on in the whole. So when I hear one of our folks tell us, hey, what the client really like is you can move resources around quickly, be able to get me the expertise I need or when we face the situation where there maybe a downturn in the particular area that we are able to move resources out of that area into another area. From my advantage point its ideal because I don’t have to worry about arguing with one of the people who leads a market or a capability about their particular piece of the pie or how they fit in, because we are all incented to be able to contribute to this -- to the benefit of the whole and the single P&L allows you to do that. And no matter how you may cut, if you divide up a P&L responsibility, people are going to manage to whatever their share of the P&L is, this when we manage to is our collective P&L. And that thing allows us to be the only firm I’m aware of, of our size and our complexity, that’s able to operate the metrics that we operate. This is the metrics where we have our three major market areas, in defense, consumable market, the security and intelligence markets, and then we array our functional capabilities against that in the other dimension and we work through this metrics.
But this metrics is very powerful for us, because this allows us to take the best people in technology, for example, and shift them to where the requirement is. It allows us to take the best people that perhaps are needed to do SC&I work, and focus them on the biggest SC&I problem. And this flexibility and ability to move across the metrics is facilitated by the fact that we have this single P&L.In addition to a single P&L, our collaborative culture is encouraged by the fact that at the senior levels we have a bonus structure that rewards only the performance of the institution, not the performance of individuals, when individual is not incited out there to try to maximize his or her pieces of pie, but rather to do things that strengthen the entire pie for all of us. So this agility, stability, structure, these are things that really allow us to accomplish what we’ve been able to accomplish, and that’s why it gives us strength and confidence going forward. I think the other thing is, when we look back and we think about where we have been in the past and we’ve seen changes in the overall spending cycles and everything else. The areas where we are able to bring value and expertise is our clients want to work with us. They want us to help them look at how they prioritize even more limited funding, or how they prioritize against certain constraints that they are now facing. We are the ones that provide the expertise that enabled them to look at how they deal with challenging times and our reputation, our expertise, our past performance are the things that allow us to do that as well. One of the other things that I think we take a lot of pride in is the fact that when we look at our organization today. We are very mindful of the concerns over ethics and compliance issues. We’ve been very fortunate that when we established our first public Board, we had Charles Rossotti, who were former Commissioner of Internal Revenue Service, but also the person who founded one of the big companies in our industry AMS, serving on our Board and someone who has consider amount of Board experience.
And Charles from the outset, he is the Chair of our Audit Committee came to us and said, one of the things that I worry about a lot for companies is, somehow rather running a miss or running a fail of an ethics and a compliance issue. It can cost you a lot of money. It can cost you a lot of reputation. So I want to make sure that everything you do is focused around compliance in the ethics area.So we had in place before I think some very good and rigorous programs, if anything we’ve strengthen those programs. And we have internal training and other methods by which we convey the importance of this, but we also make sure that we get our folks on Board with the idea that this is an important priority and not just some kind of an add-on that sits out there, to be paid attention too every now and then. Another area that we have focused on and I think has been a great benefit to us is we take pride in where we fit in the communities, where we leave and where we work. We have what we think is a very innovative and creative style about how we spend our money and our time and our effort on behalf of worthwhile community causes. As you might imagine, a firm of our size and our statue in the Washington community among other communities, San Diego and other places where we have large presence, we get constantly solicited by people to say, can you give us donation or contribution. And while we certainly are eager to be able to participate, we’ve chosen to actually spend our time and our money in a way that says, what we really want to do is get our people involve. When our people come to us and they tell us that they want to work in a particular charitable activity and they are committed to it, and they bring their friends and their colleagues with them to work in that activity, we put it up corporate money behind that to support it and make it successful.
And whether it would be venture to feed the homeless, whether it would be something to rebuild homes for people that don’t have homes. Whatever the cause may be, if it’s a worthwhile cause and our people are involved and engaged, we support that with our corporate resources.And we find that rather then just sending checks, we are able to multiple the power of our dollars many fold by the engaged and involved activity of our people. And how they go out and approach these problems and actually bring personal health. One of more gratifying things for me in the roll that I get to play is that, I’ll go to social locations in D.C. and it almost invariably. Whether its anything from a hockey game to a big Black Tie Gala, when I see colleagues in the industry and people around, invariably I get approach people to say, hey, I just want to thank you, for what, so and so at Booz Allen is doing to help us. How they come in to work with this organization and they made things different, they made things happen, they are making the difference, and we are grateful to Booz Allen for that. That’s what our people do, but you know its good business. Its good business for us because it allows us to really help motivate our people and have them be engage in a way that they take great pride in the institution and therefore, they are ever more eager to commit and to work with us to be most power employees and ambassadors for the firm. They take great pride and recognition that we’ve got. I mean, we’ve been recognized I think for 13 years in a row by working Mother Magazine and one of the best places to work, and we continually get these kinds of recognition from fortune magazine and other places like that. The business counsel on the arts gave us recognition this year for being one of the big supporters of arts in the United States.
This is a part of who we are and what we are in the collective corporate culture. Why this culture is so important in building the firm that we are, to build the people that we have, because really being the best is pretty simple terminology. It’s having the best people. Doing the best work, for the best client and you work with that day in day out, no compromise, that’s what we do and that defines Booz Allen.In that regard that’s why I can take pride and say, in terms of this group, we think we are very good and effective investment. But when you look at a firm like ours, I think the strength that we have, the things that we bring to bear, really make Booz Allen something that we are good stewards of shareholder value and this slide shows the commitment to topline quality growth, increasing our margins, strong cash flow. You will hear things about this kind of topics from Sam and others who focus more on the detail. But really, we are very solid stable company who takes great pride in who we are, what we are, what we are doing and where we are going? We have a great deal of confidence based on past performance and current performance about our ability to do well in challenging time. We’re certainly realistic enough to know that there is going to be some challenging times ahead, but we think we are going to be able to lead path as we move forward. So, I think, I’ll stop with that Curt and say, maybe I can take some questions, but I wanted to list that baton for who we are, what we are, what we’re going to try do here today. Curt Riggle Yeah. Thank you very much. So we do have time for one or two questions. The microphone button at the bottom of your -- button at the bottom of your microphone, turns it on, red light comes on, if you’d like to ask the question, we have time for one or two.
Ralph ShraderThis is what we, I always refer to is, the fairest (inaudible) movement, when the teacher in the front goes, anyone, anyone, and you stand here and say, well, I must have done such a complete the great job of answering all your questions, there is nothing left to ask and so, I take great pride in that, but I also hope that there is nothing after that has been on ask that you would like to talk about anything. Read the rest of this transcript for free on seekingalpha.com