Booz Allen Hamilton Holding Corp
NYSE:BAH
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Booz Allen Hamilton Holding Corp
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Good morning. Thank you for standing by and welcome to Booz Allen Hamilton's Earnings Call covering First Quarter Results for Fiscal 2019. At this time, all lines are in a listen-only mode, later, there will be an opportunity for questions.
I'd now like to turn the call over to Mr. Nick Veasey.
Thank you, Brian. Good morning and thank you for joining us for Booz Allen's first quarter fiscal '19 earnings announcement. We hope you've had an opportunity to read the press release that we issued earlier this morning. We have also provided presentation slides on our website and are now on Slide 1.
I'm Nick Veasey, Director of Investor Relations, and with me to talk about our business and financial results are Horacio Rozanski, our President and Chief Executive Officer; and Lloyd Howell, Executive Vice President and Chief Financial Officer.
As shown on the disclaimer on Slide 2, please keep in mind that some of the items we'll discuss this morning will include statements that may be considered forward-looking, and therefore are subject to known and unknown risks and uncertainties, which may cause their actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, general economic conditions, the availability of government funding for our company's services, and other factors discussed in today's earnings release and set forth under the forward-looking statements disclaimer included in our first quarter fiscal 2019 earnings release and in our SEC filings.
We caution you not to place undue reliance on any forward-looking statements that we may make today and remind you that we assume no obligation to update or revise the information discussed on this call.
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 2019 slides.
It is now my pleasure to turn the call over to our CEO, Horacio Rozanski. We are now on Slide 3.
Thank you, Nick, and good morning, everyone. Thanks for joining us. We have excellent first quarter results to report this morning. Financial performance in line with the multiyear goals, we announced at Investor day in June.
Our latest quarterly performance coming on top of more than two years of consisting growth affirms that our investments thesis offers a compelling near and long-term opportunity for investors. Today, Lloyd and I will discuss the first quarter results in the context of the full fiscal year and our three year financial goals. Thus our expectation for this quarterly call going forward because that’s where our focus is and will remain.
To recap, the Booz Allen investment thesis has three parts. The first is that we are uniquely positioned to capture market upside because of the investments we have made under our vision 2020 growth strategy. Second, because of this differentiation, we believe we can grow ades by 50% over the next three years from about $2 last fiscal year to about $3 in fiscal year 2021. And third, we believe there is option value over and above the quantifiable three year goals we have set. This potential exists because of the new capabilities, markets and business lines that we are developing.
Our first quarter performance reinforces the confidence we have in meeting our expectations for fiscal year 2019 as well as our three year objectives. Industry leading organic revenue growth continued to drive excellent bottom line performance. We also hit new records since the IPO for both first quarter book-to-bill and total backlog. So while there is room for improvement in cash flow and we will look to grow headcount in the coming months, on virtually every other metric, this has performed well as 2019 got underway. As I said last quarter, the market is better than we have seen in years and we are positioned where demand is strong and growing. Federal agencies are funding in hand and clients clearly value the unique combination of our advanced technology mission knowledge and consulting expertise as Booz Allen offers.
Across all of our markets from our core federal business to global commercial, clients' trust that are people and solutions will help them tackle their biggest problems and have advanced their most important missions. Thus trust generates growing demand for the expertise and capabilities we sell which in turns posses strong and sustainable, top and bottom line performance. Lloyd will take you through the details.
But before we get there, I want to recognize all the hardworking people of our firm. Their success in delivering work to clients and capturing opportunities both recomplete and new work is really exceptional. It has produced 10 consecutive quarters of revenue growth as well as record breaking performance on bookings and backlog. Their scale and agility are also creating new opportunities for Booz Allen what we described as optional value at our Investor Day. I want to highlight just one of our many recent awards because it’s a great example of how our strategic transformation has uniquely positioned us to capture such new opportunities. It shows that we are both continuing to grow our core business and leaning forward to build capabilities for new business lines in the future.
This morning, I am pleased to announce that our firm has been chosen by The Department of Defense to build and open systems architecture and apply machine learning to massive amounts of intelligence data that currently resides across multiple systems. The program is known as eMAPS for Enterprise Machine Learning Analytics and Persistence Services. It is one of the first large scale operational applications of artificial intelligence and machine learning to multi source data analysis in the federal government.
Our ability to win this work is the direct result of our investments in digital solutions, engineering, cyber analytics and artificial intelligence. Under this $885 million five year pass quarter from GSA FEDSIM will combine all those technologies with our consulting, change management and mission knowledge to deliver powerful new solutions to The Department of Defense. The market for artificial intelligence is here and Booz Allen is well prepared to capture it. This is compelling work that motivates our people, helps us attract the right talent and allows us to work at the leading edge of both technology and mission. In addition, it produces our aspiration to be a leader in this area building a large portfolio of AI business. We believe we can create value by pairing smart machines with brilliant people to help our clients' perfect our country.
Constant evolution, looking over the horizon to anticipate where the market is going, what clients will need next and what our firm can achieve is that they had differentiation on our option value. It's always been part of Booz Allen's value proposition and we are really proud when a deal successes for the near and long term.
And with that, I'll turn the call over to Lloyd.
Thanks, Horacio, and good morning, everyone. As you know, our firm introduced for the first time a set of multi-year financial goals at Investor Day. I was excited then to discuss our multi-year outlook. And today I'm even more excited to start reporting on our progress towards those goals.
To recap, we set a target of growing adjusted diluted earnings per share by 50% over 3 years and returning $1.4 billion to our investors in the same period. We envision the path towards these goals is being routed and 6% to 9% annual revenue growth and cumulative margin expansion of 10 to 30 basis points. And one of Booz Allen's strength is that we have the strategic and financial flexibility to adjust as needed based on business and market conditions.
I'm pleased to report that our first quarter financial performance shows that we are off to a strong start for meeting our fiscal year 2019 guidance and achieving our 3-year financial objectives. We had a very good quarter at both the top and bottom lines and our record backlog and quarterly book-to-bill demonstrate growing demand for Booz Allen solutions.
Before getting into the numbers, I want to point out that the firm has adopted two accounting standards ASC-606 and ASU-2017-07 effective April 1st. Adoption of these standards is factored into this year's guidance is not expected to be material to our full year results. We have restated our results for the first quarter of last year for these accounting standards, and additional details available on slides 4 and 5 and disclosed in the 10-Q we filed this morning.
Now let's get into the numbers. Please turn to Slide 6. Starting at the top-line, first quarter revenue and revenue excluding billable expenses grew 8.1% and 9.2% respectively compared to the prior year. We are committed to above market growth and we delivered again on that promise. As Horacio said our backlog and book-to-bill performance was outstanding and will continue to provide support for growth in the long term.
Book-to-bill was 1.64 times and total backlog as of June 30 was just over $17 billion, 21.4% larger than a year ago and the highest since our IPO. Funded backlog of $2.8 billion is a first quarter high and represents 11.6% increase over the prior year. Unfunded backlog at $4.1 billion is up 27.7% and price options increased 21.9% to $10.1 billion.
Headcount is up 4.7% year-over-year but was down slightly since the end of March. We expect most of our hirings to be done in the second and third quarters of this year. In fact, we are already seeing headcount numbers beginning to grow in the second quarter and we remain comfortable with our expectations for the full year.
Moving to EBITDA, we continue to translate top-line growth into profit. Adjusted EBITDA for the first quarter was $178 million, representing a 25% increase. Adjusted EBITDA margin was 10.8%. The high margin for the quarter was driven by combination of stronger than anticipated contract level performance, solid operating performance, the timing of certain cost recoveries and lower than anticipated billable expenses. We do not expect all of these same factors to continue over the course of the year. We are obviously pleased with our profitability to start the year, but after one quarter performance we’re not changing our view that full year adjusted EBITDA margin will be in the mid-9s.
Net income at $104 million is up 48% and adjusted net income grew 47% to $105 million for the quarter. The increases were due to our revenue growth, improved margins and lower effective tax rate. Those factors as well as a lower diluted share count drove the $0.25 increase in the first quarter adjusted diluted earnings per share to $0.72. The decline in our diluted shares outstanding of over $5 million reflects the successful execution of our share repurchase plan over the last 12 months.
I will now turn to the balance sheet. Last week we announced the transaction to refinance our Term Loan A. The transaction reduces the pricing of our Term Loan. It extends the maturity of our Term Loan A and revolving credit facility and it provides added flexibility and liquidity through a delayed draw facility of $400 million. This feature allows us to draw down the additional capital over the next 9 months. This refinancing aligns with our multi-year view of the business and will further support our plans to create long-term value for our shareholders.
First quarter cash from operating activities was negative $27 million, which was a reduction of $31 million compared to the same quarter last year. Our first quarter is typically the lightest for operating cash due to the timing of bonus payments. However, this quarter, our operating cash flow decline was more significant due to two negative factors: lower cash inflow as seen in our higher accounts receivable balance and DSO levels, and more cash outflow from a decline in our accounts payable.
On our last call, we discussed a cash management strategy intended to improve our operating cash flow position. This strategy includes a focused effort on management and process changes to increase our operating cash results for the full year and with a particular focus on DSO. We continue to execute against that strategy and remain confident that we will generate $380 million to $420 million in operating cash, an 8.4% increase at the midpoint for the full fiscal year. Capital expenditures for the quarter were $20.5 million.
Our expectations for the full year are unchanged with spending levels up to $100 million. As we mentioned previously, the increasing CapEx is growth oriented and supports the evolution of our business. At Investor Day, you recall, I talked at some length about our capital deployment strategy. It is central to our value proposition to shareholders with an expectation that we will deploy $1.4 billion over the next three years, including our quarterly dividend.
Please turn to Slide 7. During the first quarter, we returned $76 million to shareholders through dividends and share repurchases progress toward our goal of deploying $350 million this year subject to market conditions. Given the fundamental strength of our business, our strong start to the year and our continued confidence going forward, the company announced today that it has authorized a regular dividend of $0.19 per share payable on August 31st, the stockholders of record on August 14th.
Before moving to Q&A, I’ll reiterate our fiscal year 2019 guidance which is on Slide 8. We continue to expect revenue growth in the 6% to 8% range. At the bottom-line, we expect adjusted diluted earnings per share to be $2.35 to $2.50. I'm very pleased with our performance in the first quarter and excited about the foundation it gives us to deliver for this year.
Furthermore, the strong performance illustrates that the business is set up to achieve the multiyear financial goals we outlined last month. As we continue to grow and evolve our firm, we are fully focused on delivering both near and long-term value for our shareholders.
I'll conclude there. Nick, let's open the lines up for questions.
Thanks, Lloyd. Brian, could you give us the instructions please for our Q&A period.
My pleasure, sir. [Operator Instructions] And our first question will come from a line of Carter Copeland with Melius Research. Your line is now open.
Hey, good morning guys.
Good morning.
Just a couple of quick ones, one Lloyd, on the margin in the quarter, was there anything related to the 606 adoption that cause those discrete items that were benefited to be particularly pronounced in the quarter? And then one for Horacio, just on the eMAPS contract win. How should we think about what that represents as a portion of the addressable market? Or what that can grow into? And could you give us a sense of -- or the economics of that contract any different than what we've come to understand over the years on prior work? Thanks.
Sure. Carter, regarding 66, there is no impact on the margins. We expect to see relatively flatter early margin throughout the year due to the seasonal spending patterns but there is no material impact on our full year financials.
Let me take on your second question. It's great that you asked both at once because it gives us an opportunity -- it gives me an opportunity to think. So on eMAPS, first of all, we're very excited about the win itself because it is as I said on the prepared remarks, one of the largest, most significant operational AI applications. And so we see this as the beginning of something. As we look at procurements in general, especially coming out of DoD, it is clear that artificial intelligence is an area of focus and an area of investment. Our clients have been wanting to do that for quite some time. And frankly, they haven't had the funding to do that. But the funding is now available and they're investing.
We’ve been investing on our end ahead of the curve to be ready when they're ready and thus what we're seeing. And so I don't know that we'll see identical things for eMAPS in the future but this concept of artificial intelligence algorithmic warfare is going to be part of the equation for DoD for quite some time and we're very excited to be part of it.
And then on earnings have two parts. One part is the more traditional types of vehicles like eMAPS, and this is a costless vehicle and it has good economics consistent with our portfolio and we're very pleased with that. As important, this is where we get to both test and apply and developing intellectual capital that we can monetize. If you remember when we talk at Investor Day about auction value, into new business lines, new ways of capturing value, and we view opportunities like eMAPS of the places where we’re really going to have the opportunity to get ahead of that curve.
Horacio, when did you anything particularly important about the competitive landscape in that arena and your positioning within it?
So I’ll give you my opinion more broadly than just about this win. Everybody expected this to happen at some level, but they expected things like this to happen much later in the cycle, three four years from now, and the factors are coming now. I don’t know many companies or any companies that are as well positioned as Booz Allen to take advantage of this opportunity.
Thank you. And our next question will come from Sheila Kahyaoglu with Jefferies. Your line is now open.
Hi, good morning, everyone and congratulations on a very nice quarter. I guess, anyway to think about market growth versus market share growth in the quarter? And then, as it relates to the backlog, any particular areas that are growing faster than others?
So, I’ll start, Lloyd, if you want to add. We’re obviously very happy, 9.2% growth at revenue that's billable to say. It’s a great number even for us. And it signals strong demand together with the backlog numbers and everything else for us to be at record numbers. We believe that there is some underlying market growth, but a lot of this is our unique positioning in the market. And being there where technology meets mission and where all these transformations are being invested in is what ultimately, if you look at the market at last, we believe allows us to capture share.
In terms of the business, it is actually pretty much across the board, where we’re seeing opportunities. I was, just to give you an example, I was in Colorado a couple of weeks ago. I was in Denver, talking to our clients around the Rec.gov program. And they see tremendous opportunity there. I was then in Colorado Springs talking about the evolution of space as a work factory domain. And we see again a need for real transformation in a place where Booz Allen given the work that we are doing and the capabilities we bring to make a difference. And that’s just one trip out of many. So really the market and the business are signaling strong demand.
Sheila, I don't have much more to add other than the growth in our backlog is across the entirety of our portfolio. As Horacio said previously, it's one of the best markets we've seen in five years. On a trailing 12 months book-to-bill ratio, we’re at 1.48 times, which is also a strong signal to us that the demand is there.
Thank you. And our next question will come from the line of Edward Caso with Wells Fargo. Your line is now open.
Good morning, and my congrats as well. There is an announcement on one of the newswires that you guys have won $1 billion contract with Homeland Security to let’s call CDM Defend. Can we assume that not in the bookings that you have given us this morning? And the second part of my question is -- is this really strong book-to-bill in the June quarter a pull forward? Or do you expect your normal extremely strong September quarter book-to-bill? Thank you.
CDM is not in our current book-to-bill performance. And in terms of our seasonality, we expect to follow the same pattern that we have in previous years with regard to our backlog and book-to-bill performance. If I think from a caller standpoint, first of all we’re very pleased with CDM. It is part of that work as we compete, and so it is as forecasted. But the thing I would say is this government fiscal year Congress finishes work a couple of months earlier than the year prior, and so we’re seeing an extended selling season that started in the first quarter as opposed to it all rushed through the end. But we’re seeing strength through as Lloyd said, through the summer months and we have opportunity throughout.
Thank you. And our next question will come from the line of Robert Spingarn with Credit Suisse. Your line is open.
Good morning. Again, great numbers. There is really not a lot to poke at here other than the cash timing. So what I was going to ask you to elaborate a little bit more on that. And then from a higher level, Horacio, again going back to your comment that this is such a strong environment -- the strongest in years and this follows on couple of the other questions. How much of this is the Omni bus change in trends toward outsourcing or possibly just an accept change in funding behavior? They’re just more confident so they’re letting more funding go earlier. And then I have just a quick follow-up for Lloyd.
Sure. As it relates to cash, I mean, this is an area that we’re continuing to focus on and address. The two factors that are contributing DSO and CapEx, again with DSO, we have a plan that we’re executing against. We’re implementing process changes to enhance our efficiency regarding processing of invoices and secondly we’ve got more active engagements with the payment offices to mitigate collection delays. Our CapEx is growth oriented. And as we said on Investor Day, we expected the peak at $100 million sale of it is over a period of time. We’re still focused on operating cash flow. And in my prepared comments we’re confident that we’re going to be in the $380 million to $420 million in terms of guidance. It's very consistent with our investment thesis. And when you consider the debt refi, we just completed. We’re in a great position to execute on that thesis with the savings of 50 basis points and then also sneaking about 2.8 times net leverage.
Rob on your question for me, I don’t know that there is one size that fits all, each agency has its own funding pattern, each agency has its own budget opportunities and challenges. So we almost have had discussion that an agency-by-agency level. If I was going to try to extrapolate off to just sort of the market level, overall I would say it is. As I said last quarter this is one of the best markets we’ve seen, certainly in the last five years. And that is a source of opportunity for us more importantly as we discussed on Investor Day, we believe we’re uniquely positioned to capture market upside because of the capabilities that we’ve build and because we’ve positioned ourselves in the place where technology meets mission and where we can really drive strategic transformations for our clients. So the application of new technologies, the ways of prosecuting either to existing missions or new missions. That's where our upside comes from in the market and that's why we believe it is sustainable beyond just the fact that this is currently a very good market.
Okay. And then thank you for that. And just Lloyd back to you. Somewhere you just said timing wise was there a push on sales or were sales backend weighted? And this is part of the reason of receivables were higher out of the end of the quarter. And the other thing I wanted to ask you was just on the relationship between headcount growth and sales growth 47 versus 81. Is productivity improving or pricing? Maybe I'll ask it this way, if sales is to rise about 7% for the year, how much of headcount be up for the year?
So let me walk through this question. On the first line, we certainly are seeing a great environment in terms of sales. It is contributing we think to some degree to the mismatch between receivables and payables. But as I maintain, we're confident we're going to meet our operating cash objectives in terms of 380 to 420. As it relates to the connection between revenue and headcount, we're up 5% year-over-year, which basically means that we added about 1,100 folks to the business. And we expect most of our hirings to occur in Q2 and Q3. And when we look at some of the norms that are coming in now, we're already seeing movement in that direction. So it makes us very comfortable with your full year expectations. Our revenue at very strong demand, very strong contract performance as we have been working our beds down since the last year. That is also contributing to the performance of the gross revenue and revenue as total.
Thank you. And our next question will come from the line of Cai von Rumohr with Cowen & Company. Your line is now open.
Thank you. So this is depending on how you're looking at about the third quarter where billables as a percent of sales has gone down. Does that just reflect the high sales level if there is a lag in getting those billables? And what should we look for billables as a percent of sales for the year?
Cai, we're still maintaining putting under 31% for the year. You are correct, it was down little bit up by that range. We expect with some of the awards that have come through or coming through that will pickup back into the range. So from our perspective, 29% to 31% is still valid.
I'll build on that. When we talked at Investor Day about 6% to 9% revenue that's billables growth for the next three years. We focused on that metric, because a) that's the metric that rise most of our profit, but b) that is the more systemic metric to understand how our business is doing. I recognize when we obviously we try gross revenue as well, but the timing of some of these billables, they happen when they happen during the year. And that's why we don't try to predict quarterly performance there that there is no real opportunity to do that with any precision.
Go it. So in the first quarter, your commercial sales grew 49%, everything else was about 7%. Is that a beginning trend that should accelerate? And is it 3x more profitable still than the rest of your business?
So I’ll start, I think Lloyd will probably want to add. But last year our commercial -- goal on commercial business grew close to 30%, that’s the third year of above 20% growth. We feel really good that the trend there is strong, I think 49% is great for one quarter but it's one quarter. But I think what’s important to that business is both growing faster than our federal business. And thus have better economics overall. So we’re very pleased with that and certainly want to see it continue.
And Cai, we are still seeing 2.5x to 3x better margins than in the federal side of our portfolio.
Thank you. And our next question will come from line on Jon Raviv with Citi. Your line is now open.
Just one perspective Horacio and Lloyd, perhaps. Just on CapEx paying $100 million elevated as you talked about at the Investor Day. To what extent do you think this business becoming maybe not more capital intensive but sort of shifting the investments required or to play in the sort of space? And to what extend you can back and drive better margins for those that are making those investments? I know better margins, I mean for structurally overtime versus what we see this for our great services?
Sure. As we said, our CapEx is really growth oriented and we believe it supports the evolution of our business. The CapEx currently focused on our facility upgrades that we’ve been making for some time as well as improving and enhancing our IT infrastructure. At this point, the premature for me to say exactly where it’s going to go. We certainly are thinking about investing in our business, being that augmenting what is now from primarily 100% labor base to a model, to consider solutions, products, things of that sort. But I’m not prepared today to speak exactly what we’re that hope to go. I think in the -- not to just in future, we will certainly take that into account, but today it’s where we are.
And then just a follow-up. In your fully understand appreciate that the market is the best you see in 5 years and that’s good to hear. There seems to always be some concern, some risk out in the future as is always the case. So what extent our customers worried about continuing resolutions, the president threatening shutdowns, deficits getting a lot bigger? Or do you feel like the value offer is able to kind of skate over those issues because year-over-year you're essentially able to help people save a lot of money and make this more efficient over the very long-term?
I think it’s all of about dealing the truth. I said to some degree, our clients have become more sophisticated managing through turbulent budgetary processes. My understanding is at least for the moment the way things are progressing through the hill is actually quite orderly and very good and one would hope that that will continue. And our clients are obviously monitoring that and they understand it. But there -- they know how to manage around these kinds of things. My sense of the market is our clients have been looking to invest in the future, have been looking to modernize and upgrade a number of things and in some places stay lead fast adversaries and global competitors. And that's where the focus is -- where their focus is right now.
Thank you
Thank you. And our next question will come from the line of Krishna Sinha with Vertical Research. Your line is now open.
Hi, thank you guys. A couple questions on margin and cash flow. So on the margin, I think Lloyd mentioned a few of the factors including some contract adjustments lower billables. Can you just disaggregate the impact of those several factors? And then on the full year cadence, right, you reiterated to sort of 9.5% EBITDA margin for the full year. So is that implying that you're expecting margins to be materially lower in the next three quarters? And I thought the point of this ASC 606 was that you'd be able to smooth the margins over that time. So I'm just trying to figure out what the moving pieces are there?
Sure. We're very pleased with our Q1 margin performance. On the contributions on the fundamental side, we did have strong contract performance, strong operating performance, but there also some timing factors in terms of the contract closeouts, certain cost recoveries and then also lower than anticipated billable expenses. Overall, we're very happy with our underlying profitability. But we got to keep in mind that not every quarter is going to be like this. As Horacio said in the past, this is what it looks like when certain things lined up. So from that standpoint, they're off to a tart, but we've managed to the full year, not on a quarterly basis. And if you can repeat your second question?
I just trying to get some sense in the cadence for the rest of the year, just given that, you're 130 basis points above the range this quarter, but you reiterated the full year guidance sort of 9.5% EBITDA margin. So does that mean the next three quarters should just be down a lot compared to this quarter?
No. Our guidance reflects the full year expectations not a single quarter. 606 is it going to have a material impact and we'll smooth out. We expect the margin performance over the course of the year. But our full year guidance remains effectively in the mid 9s. And so many factors that I previously mentioned come into play or not we really drive quarter-to-quarter. But again, we've got our eyes set on the full year, not single quarter.
Okay. And then just one follow-up. You mentioned the DSOs and how you're focused on improving that. Can you just give some timing around how you expect that to play out? I mean, is that a sort of 12 months plan to get DSOs down? And just kind of trying to figure out what's your range of DSOs? You expect to eject once you run your improvements through?
We expect it to play out over a period of time. At this point, we're still focused on our operating cash paying between $380 million to $420 million, which is an alignment with our investment thesis and capital appointment.
Thank you. And our next question will come from the line of Tim McHugh with William Blair. Your line is now open.
Most of my questions have been answered. But just, maybe if you could talk a little bit more about the civil side. I guess the 8% there is a little stronger than I might have thought given some of the choppiness within some of the different agencies. So any color would be helpful. Thanks.
It’s a strong market overall and across the board. There are many individual agencies that are more turbulent than others. And I am not sure that this is the time to discuss about that level. When you look at it overall, our business in civil around help continues to do extraordinarily well. And then our business in treasury and DHS and other departments is also - had a strong quarter, so we’re pleased with the performance overall. But again more importantly this is part what we look at as a market trend and we see the same type of upside in all other markets right now.
Thank you. And our next question will come from the line of Joseph DeNardi with Stifel. Your line is now open.
Thanks, good morning. Horacio, just on kind of if you are seeing any trends given of strong bookings were, in terms of what allowing you to win some of this business? It seems like that the factors that go into the customer adjudicating some of this that the price is becoming maybe less important past performance and technical capabilities becoming more important. I am wondering if you are seeing any trends in that regard. Thank you.
Sure. We have seen over the last couple of years, in migration away from the fewer -- absolutely fewer LPTA mindsets to more of a best value mindset, but best value in the pool sense of the world where price does matter. It's not the only factor. And that is the trend that we’re seeing across many of our clients and that’s this trend frankly helps us. We are competitive on price as we need to be but we differentiate ourselves by finding opportunities really at the core mission level, where quality is the overriding concern. And we deliver outstanding quality in terms of the people that we bring, in terms of our ability to pull from all of the institution with our single P&L and bring unique capabilities to there. And then in terms of our innovation agenda, which allows us to engage with clients, about their needs in new ways and different ways, in ways that frankly differentiate us from our competitors.
Thank you. And I am showing no further questions in queue at this time. So now, it is my pleasure to turn the conference back over to Mr. Horacio Rozanski, President and Chief Executive Officer, for any closing comments or remarks.
Thank you, everyone for your questions. Really appreciate the time today. Since Investor Day, we got a lot of positive feedback about our multiyear outlook and we hope that today’s call has given you the information you need to put our most recent quarter into the broader context of the investment thesis.
The leaders of Booz Allen are strategically managing the business and our financial performance for both nearer and long-term success thus in keeping with our history and with our purpose and values. We aim to strengthen this asset that we have built under our vision 2020 growth strategy. And our overriding objective is to create additional opportunities on value for our shareholders, for our people and for our clients.
Thanks to the people of Booz Allen. We’re on an exciting path forward with a lot of optimism about our market position, our financial goals and most importantly our aspirations for the future. So again, thank you for joining us on the call today, and have a great rest of the summer.
Ladies and gentlemen, thank you for participation on today’s conference. This will conclude our program and we now all disconnect. Everybody have a wonderful day.