Booz Allen Hamilton Holding Corp (BAH) 2017 Q3 法說會逐字稿

Good morning. Thank you for standing by. Welcome to Booz Allen Hamilton's earnings call covering third-quarter results for fiscal 2017.

(Operator Instructions)

I'd now like to turn the call over to Mr. Curt Riggle. Please go ahead.

Thank you, Stephanie. Good morning and thank you for joining us for Booz Allen's third-quarter fiscal 2017 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 Curt Riggle, Vice President 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 that we will 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 our 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 services and other factors discussed in today's earnings release and set forth under the forward-looking statements disclaimer included in our third-quarter fiscal 2017 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 in 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 included an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third-quarter fiscal 2017 slide.

It is now my pleasure to turn the call over to Horacio Rozanski, our CEO. And he will start on slide 3.

Thank you, Curt. Good morning, everyone. Happy Monday. Thank you for joining us.

This morning Lloyd and I are pleased to share with you another strong performance by the talented women and men of Booz Allen. After our pivot to growth in the last year we remain on a solid path, confidently and consistently executing against our strategy for sustainable quality growth over the long term.

On today's call we will talk about that as we walk through the details of the third quarter. Also, with last week's closing of our acquisition of Aquilent, we want to take this opportunity to provide you an update on our successful systems delivery and digital businesses. SD and digital capabilities are, as many of you know, central components of Booz Allen's transformation under the Vision 2020 strategy.

But first let me start with the third-quarter highlights. Thanks to the hard work and dedication of thousands of professionals across our firm we are seeing a lot of strength in the business. And our year-to-date financials are very much in alignment with our plan for the fiscal year.

As we have shared with you previously, throughout FY17 we have focused on several objectives. We will continue to differentiate ourselves and win in the market by offering solutions that blend the very best consulting and mission understanding with innovative technology. We will execute against our large backlog by hiring additional talent and deploying people quickly to deliver on what we promise to clients.

And we would operate with both efficiency and agility by exercising discipline in our spending while continuing to invest in areas that position us for future growth. We are on track on all these goals in the first nine months and we will remain focused on them going forward. Ultimately when packaged together, these objectives are producing organic revenue growth that leads the industry, that is sustainable and that positions us for even stronger performance in the coming years.

As we enter the fourth quarter, we feel confident about the state of our business. We are very proud of the work we do for clients in both the commercial and government sectors and we look forward to working with incoming leaders in the new administration.

Our innovative solutions help make government more effective and efficient. They advance critical missions and they save lives.

Our people are fully focused on serving clients and anticipating their needs. We also continue to aggressively pursue opportunities in the federal and global commercial markets, and we will continue to invest in innovation, talent and capabilities so that we build on our success and take Booz Allen to its fullest potential. That's how we aim to deliver value to all our stakeholders from clients to employees to investors.

Given our excellent performance and optimism about the future we are pleased to announce today an increase in Booz Allen's regular quarterly dividend to $0.17 per share. We have also updated our guidance for the fiscal year.

Before turning the call over to Lloyd to discuss those topics and the full details of the quarter, I want to briefly touch on a few other items. First, in early December, as you know, The Carlyle Group sold its remaining stake in our business. Our two firms had a very productive partnership over eight years, one in which we greatly benefited from Carlyle's expertise and counsel. We are really proud to have been a terrific investment for them, and while Carlyle is no longer a shareholder we look forward to a continued relationship between our two firms.

Secondly, we have welcomed about 310 talented new colleagues to our firm with the closing of the Aquilent acquisition last week. The Laurel, Maryland-based company is a premier provider of advanced digital services to the federal government.

Aquilent's talent and capabilities fit perfectly into our strategy for growth. And we expect to quickly integrate it into Booz Allen as another regional hub for our digital business. I will talk a bit more about the growth we are seeing in that business in a few minutes.

But before that I want to put a spotlight on our Third Annual Data Science Bowl which was announced earlier this month. Booz Allen and Kaggle cosponsor this challenge which brings the global data science community together to tackle a really tough problem.

In the competition currently underway teams will develop artificial intelligence algorithms to analyze more than 100 gigabytes of lung scan data provided by the National Cancer Institute. The aim is to more accurately diagnose lung cancer so that patients can get the treatment they need and have a better chance of survival. As a firm, we are committed to empowering people to change the world.

We do this through our client work, our community service and impactful programs like the Data Science Bowl. This commitment to the greater good is a defining attribute of our culture and it has always been central to Booz Allen's success. It helps us attract and retain the best talent and it solidifies our brand as a purpose- and values-driven Company.

With that, Lloyd, over to you.

Thank you, Horacio. We are now on slide 4.

I think the best way to summarize our third quarter is that we remain on a solid growth path because we are executing with discipline against both our plan for the fiscal year and our strategy for the future. We have a near-term plan for business operations that supports a long-term strategy for growth, and we are executing exactly according to our plan for FY17. That's how we run the business year after year, setting a plan and then managing with foresight and agility so that we can position ourselves for the next year, the next year and so on.

In the last year our Vision 2020 strategy began to produce year-over-year revenue gains and throughout FY17 we have been competing from a position of strength in a challenging market. Leaders across our firm have more fully operationalized the investments we've made in specialized talent and capabilities. And we are seeing our portfolio evolve into one that better leverages the integration of all of our functional skills: consulting, engineering, digital, cyber and analytics.

Let me run through the specifics. Please turn to slide 5.

Revenue was up 7.4% over the prior-year quarter driven by effective deployment of our people onto contracts in response to client demand. Rising demand from our solutions and services also led to an increase in billable expenses. These revenue drivers are the same we've seen throughout this fiscal year, and for the full year we still expect billable expenses to be about 30% of revenue.

We continue to make good progress recruiting and hiring in a very competitive market for the most highly skilled talent. We gained nearly 290 employees during the third quarter and as of December 31 we had about 440 more employees than a year ago. Hiring will remain a top priority for the rest of the year and into FY18, so it's gratifying to see that our focus in this area is making a difference.

As we continue to try new things and learn from them we will scale the most effective sourcing and recruiting approaches across our geographical and functional areas.

Continued momentum also shows in our backlog which is at a near record level. As of December 31, it was $13.5 billion, 12% higher than a year ago. The total reflects year-over-year increases in all three categories: funded, unfunded and priced options.

Book-to-bill was 0.92 times which is well above recent December quarters. In fact, third-quarter book-to-bill has not been stronger since December 2010.

Our opportunity pipeline also remains healthy with total value of proposals up for the fiscal year and longer periods of performance. At the bottom line, we continue to report solid results in line with our fiscal year plan. As we have said previously, we are investing ahead of growth, going after contracts and building up our capabilities and talent in high demand areas.

We intend to continue doing that to ensure that we grow where we want to grow. When compared to the prior-year period, operating income and adjusted operating income increased, primarily due to revenue growth. Declines in net income and adjusted net income when compared to the prior-year period reflect a modestly higher effective tax rate without the benefit to net income that we received in the third quarter last year from the release of certain income tax reserves.

EBITDA and adjusted EBITDA increased slightly. Adjusted EBITDA margin was 8.7% and adjusted diluted earnings per share for the quarter was $0.38.

Moving to cash, we are very pleased that our position has improved throughout the fiscal year due to both revenue growth and spending discipline. Cash from operations in the first nine months is running about 55% higher than in the first nine months of FY16 and capital expenditures are running as planned. As a result of this improvement, we now expect the adjusted net income to free cash flow conversion rate for the full fiscal year to be modestly above 100%.

Now let me turn for a moment to capital allocation. Please turn to slide 6. Rather than ranking priorities as we've done in the past, we plan to retain flexibility in how we deploy capital depending on general economic conditions, availability of options for supporting growth and value creation and the strength of our balance sheet.

Under our flexible capital allocation strategy, we will strive to maximize long-term return to shareholders using a range of tools including supporting organic revenue growth with acquisitions aligned to our strategy, managing our debt smartly recognizing that interest rates won't stay this low forever and returning cash to shareholders in the form of regular and special dividends and share repurchases.

In support of this strategy, the Board of Directors last week approved a $0.02 increase in our regular quarterly dividend as Horacio mentioned. The Board also approved a $230 million increase in our share repurchase authorization, which means we now have the flexibility to repurchase additional shares worth up to roughly $300 million.

Booz Allen has a record of excellent returns to investors and always strives to build on that. Because we understand the value of leveraging our balance sheet we intend to make full use of all tools at our disposal under this flexible strategy.

Finally, before turning it back to Horacio, let me provide our updated guidance for the year which is shown on slide 7. For the full fiscal year we now expect gross revenue to grow in the range of 4% to 6%. This reflects both our year-to-date performance and an expected $20 million in additional revenue from the Aquilent acquisition for the remainder of this fiscal year.

The acquisition is expected to be accretive to earnings and add to operating margin next fiscal year. For fiscal year 2017, we now expect diluted earnings per share to be $1.65 to $1.69 and adjusted diluted earnings per share to be $1.70 to $1.74. On both revenue and earnings we are now in the top half of our original FY17 guidance ranges which demonstrates again the strength of our business and our commitment to delivering value to shareholders.

At this point I will ask you to turn to slide 8 and hand it back to Horacio.

Thanks, Lloyd. As I said at the top of the call even though we just closed on the Aquilent acquisition I want to use this opportunity to provide an update on our digital solutions business. That's the umbrella term we now use to describe a set of interconnected high demand capabilities that include systems delivery, digital, cloud and mobile.

Our strategy has been to create a differentiated business built on three pillars: mission understanding, technical depth and a consultative approach. You actually need all three to design, build and deliver complex technical systems that work and most importantly will be adopted by users.

In building this business we have focused on both innovation and scalability. The acquisitions of SPARC last year and now Aquilent help us on both fronts as has the progress we've made in hiring talent with a passion for innovation, expertise in cloud, mobile and modular technologies and a mastery of advanced methodologies such as Agile, dev ops and open-source.

We have also stood up a dedicated team for incubating new methods and technologies. And we offer a lot of technical training to our people so that they stay at the very cutting edge in disciplines that are rapidly changing.

A third key to achieving sustainable growth has been our success in winning work that is right at the center of our clients' most important missions. For example, Booz Allen created a big data technology platform and suite of analytic tools that helps a joint improvised threat defeat organization to more quickly understand and thwart dangerous threats to forward deployed troops. We partner with the IRS to build and deploy an easy-to-use one-stop shop for personalized online tax assistance.

At the General Services Administration, or GSA, we are integrating and making vastly more efficient the systems that processes billions of dollars in federal acquisitions grants and loans. And at the Department of Veterans Affairs a solution built by our experts has accelerated the processing of compensation and pension claims and reduced the large backlog.

As you can tell these are top priorities for our clients and we are very proud to support them in these missions. You put it all together and in the past two years our digital solutions business has grown tremendously. We have roughly 3,700 digital professionals in our firm, up by one-third since 2015.

With the acquisition of Aquilent that number will climb over 4,000. The number of active digital projects we have across federal agencies and commercial clients has increased 35% in the same period to more than 350 and we have a robust pipeline for the future.

As impressive as these results are, a similar story can be told about other technical areas we've been focused on under Vision 2020. The key to our growth has been our unique operating model and our ability to integrate new capabilities with our long-standing strengths in consulting, client understanding and subject matter expertise. The further we get into implementing our strategy, the more certain we are that it's the right one to accelerate growth, strengthen our firm, attract the best talent and take us into the future.

With that, Curt, we are ready for Q&A.

Thank you, Horacio. Stephanie, at this point can you give instructions for the question-and-answer session of the call?

(Operator Instructions) Amit Singh, Jefferies.

Hi guys. Thank you for taking my question, and a strong topline performance.

So just regarding the guidance for the full year, could you help me understand how much of that raise in guidance is from the Aquilent M&A and I guess slightly higher expectation for billable expenses? Earlier you were expecting 29% to 30%, now I think you are expecting 30% versus general improvement in the demand environment?

Thank you for the question. It's a combination of all the above. As I said in my opening comments, we expect $20 million from the Aquilent acquisition to contribute to the topline.

As I also mentioned with a slight uptick in billable expenses due to small business set asides, particularly in our defense and intelligence markets. That's the market that we compete in and we are responding accordingly.

We also had some equipment purchases that we were expecting to occur in the fourth quarter move into the third quarter. So in looking at those dynamics they certainly have contributed to the topline. But I also want to add that we still are seeing strong demand for our services as indicated by our backlog increase, and the overall team is working very well to compete and win those opportunities.

All right, perfect. Just one question related to that. As we look at your fourth quarter, which has only two months left, what can drive that big variability in overall 4% to 6% revenue growth for the full year, which could imply minus 2% to plus 6% for the fourth quarter?

As you know, we don't give quarterly guidance. But as I have maintained from the very beginning, we really look at our ability to source and attract the talent and get that talent onboard. So the biggest impact that we see is the continuation of the strong headcount growth that we have seen throughout this fiscal year.

All right, perfect. Thank you.

Tim McHugh, William Blair.

Yes, thanks. I apologize, did you give an update on what you think for EBITDA margin for the year? Did you still expect to see some improvement or has that changed?

We continue to be in alignment with what we have said for the remainder of the year. Our margins are the best in the industry and our updated guidance reflects our margin expectations.

Given that the third quarter is behind us our earnings and margin are right in line with our full fiscal year plan. And they reflect greater spending discipline, which has been the focus throughout the year, and our continued investment in capturing opportunities in the capabilities and talent which will fuel our long-term growth. As I have said in the past, we are continuing to see improvement and expect improvement throughout the remainder of the year.

Okay, I'm sorry, just to clarify because I wasn't sure there. I think your comment was they remain in line with what you expect for the remainder of the year, but the full-year expectation I guess is it still for an improvement in the year in the margin?

Correct.

Okay thank you.

Brian Ruttenbur, Drexel Hamilton.

Yes, a couple of clarifications. On the cash flow on the year you talked about 100% free cash flow conversion on the year. So you expect to end with what kind of cash and debt at the end of the year?

Brian, this is Curt. We've been talking about the cash conversion. In the last call we talked about 95% to 105%.

It's clear at this point we are going to be over 100% conversion of adjusted net income. We haven't laid out a cash balance expectation, but I think you can do the calculation to get there.

I can do the calculation correct, but I don't know if you are going to be using any of that cash to pay down debt and what your plans are with that cash. That's a roundabout way of me asking what are your plans for your cash and your debt for the year?

I think the way Lloyd laid it out is the flexibility that we are going to look at in the capital structure and how we use that cash will be based on the opportunities that we see.

Okay and then last question, bookings by year-end should be greater than 1.0? Is that the plan?

Yes.

Perfect, thank you very much.

Robert Spingarn, Credit Suisse.

Good morning everybody. I wanted to ask a question about the margins just coming down, the adjusted EBITDA margin coming down here slightly. You've increased headcount modestly year on year.

Your sales are up 6% I think through nine months. So I would expect the margins to have gone up, or are you just investing now?

We continue to invest in the business and we will do so going forward. And so that contributes to the performance that we had. As I said also, that is in alignment with what we expected to achieve throughout the year.

So Lloyd, is there an opportunity here for margins to pop at some point when you've got the infrastructure? I know it's a constant evolution here and you are constantly growing, but is there a point here where your structure and your infrastructure will match up the way you want it to to your business and we see some kind of margin lift even if it's not this year?

Today we like the structure that we have and the infrastructure that we have. And it solely relies on our ability, which we've done for a number of years, to invest in the business which we will continue to do so.

Let me try and add to this. When we look at the market and we look at the future we are looking to accelerate our growth rate, especially as it relates to the revenues produced by our own labor, not by subcontracts and pass-throughs, and that requires investment. At some point that growth rate will level off into something hopefully higher than it is today, and then we will get a chance to decide what the right investment posture is.

I think Lloyd used the word flexibility, I used the word agility a couple of times in the script. That's what we are focused on right now. We believe we see a strong demand signal for our services, for the kinds of things we've been investing on and we want to double down and make sure that we create the wave and we catch it.

You know how this business works and you know that there is opportunity to put more into margins at the right time. We probably will do it, but for the time being we are very happy with both our performance and our investment posture.

Right. And you see what I am talking about.

A 2% increase employees against a 6% increase in sales, I understand some of that is indirect and pass-throughs and so on. But it would seem to me to create opportunity at some point. That's what I'm getting at.

At some point for sure. But I think again the real question is how do we want to invest and how fast can we grow the business and how do we want to think about all of that in the context of not just one or two quarters but in the context of a long-term performance we are trying to drive.

Okay, and then just briefly, Horacio, high level have you seen any changes yet from the customer as we transition into this new administration and what are some of the opportunities and challenges that you are beginning to think about in this new era here under Trump?

First of all, let me say we are really proud of the work we do for our clients because we are working at the center of their missions. I said that in the script but it bears repeating the work that we do helps save lives. The work that we do helps keep people healthy, helps government run better and we believe that in the medium term the opportunities for that and for us to bring our capabilities to bear will create growth which is the premise of the last conversation.

I think it is too soon to tell whether there will be any kind of small short-term disruption as this transition happens. It wouldn't be the first time or the last time that happens.

We have been, not me personally, but we as a firm have been doing this since 1940. And all of that could be lead up to some near-term disruption. It hasn't yet, but the key point for me is we see opportunity to contribute to the nation's agenda in the medium-term and to create upside for our stakeholders.

Okay. Thank you.

Jon Raviv, Citi.

Hey, good morning guys. Thanks for adding some color to capital deployments, not priorities but philosophy.

But can you add a little more color on the capital deployment philosophy? Potential timeline for the new authorization, whether that's going to be opportunistic or just to keep the share count flat or perhaps have an opportunity to drop share count and also how weighing M&A versus repo in that context?

Sure. As I've said in previous meetings, calls, as well as one-on-ones, we really like and enjoy the current strategy which is to really leverage the full range of tools from bolstering our organic growth either through acquisitions to effective debt management to dividends and share repurchase. So we want to maintain flexibility with our capital deployment.

As I've stated in the past our acquisition strategy is in direct alignment with Vision 2020 and our investments around key capabilities: cyber, systems development, software development, engineering, data analytics. And we will continue to do that.

As it relates to the share repurchases, that also is meant to maintain flexibility. Should we want to or need to or given market conditions repurchase shares we will do that. I would caution that we may move away from keeping the share count flat depending upon market conditions or the opportunities before us.

So in the past I think we prioritized different elements of our capital deployment. This morning communicating that we want to maintain the tools that we have with a highlight or a focus on the flexibility of applying those tools given market conditions.

Thank you, Lloyd. And on the margin question, I know you mentioned that you still expect EBITDA margin I believe to be up year on year.

That would imply a fourth-quarter step-up which we don't usually see from you guys. Can you talk about the drivers to achieving that step-up and then related really timeline for getting back to the 9.9% level which you guys was your previous high? Thanks.

It points back to continued strong management of our business and our costs. It points to continued deployment of our people, on our engagements.

And as it relates to the time horizon we want to continue to improve on our margins. But today we have the best in the industry. Our updated guidance reflects our margin expectations and we will look to continue to improve on that.

Thank you.

Ron Epstein, Bank of America Merrill Lynch.

Good morning, guys. Maybe just following up on Rob's question, not to put words in his mouth, but I think where he was going, and this is the same thing I'm wondering about, what are the potential opportunities in front of you? And have you seen yet, there's been a lot of discussion around increased outsourcing to services to firms like your own, that kind of thing.

So understanding that there could be potential disruptions around the change in leadership in DC and that's sort of how it goes, where could there be potential upside? And there's also a lot of talk about a defense budget that's going to grow at a trajectory that potentially was higher than what anybody was thinking before we saw all this change in the politics. So if you could add a little color there that might be interesting.

Let me start. I guess what I would say is this. Over the last year even before the change in administration we are seeing increase in demand for our services.

I think we have done a really good job of positioning ourselves against areas that have inherent growth in them, against areas that have inherent opportunity. And not just that, but we've built the capabilities where we really make a difference with clients where we can apply them, which is driving more demand. And I think a lot of our demand expectation comes from that.

If on top of that some of these things come to pass around an expanding market, our goal is to outpace the market no matter what the market is. And if you look back certainly since we went public and you do the math you will see that that is what we have done. We are looking at accelerating growth for our own labor base over the next year, really assuming a stable market.

If the market starts to grow we will grow faster than that. So that's pretty much the way we are picking it up. And that's why we are cautiously optimistic about where things are going.

I don't know what else there is to say there. Because, again, it's early days and I think a lot of conversations need to become policy and that process has its own timeline. So we are not banking on that as we talk about optimism.

The only thing I would add is just given Horacio's opening comments around our systems development business, our investments in the areas that I mentioned are giving us the economics that we hoped for and that we are seeing. So regardless of what may occur at the policy level, we are ever getting closer to the missions of our clients. We have invested in areas that are giving us the returns, top and bottom line, that we hoped to see and we will continue to move in that direction.

Okay, great. Thanks.

Cai von Rumohr, Cowen and Company.

Yes, thank you very much. So to get to just 9.4% flat year-over-year adjusted EBITDA margins looks like you would have to do about 9% in the fourth quarter. And you closed on Aquilent in the fourth quarter, so I assume there's some transaction expenses in there.

So that would be very strong performance. Are there any one-timers that would get you to a level that strong or is this just good strong performance? Thanks.

This is Curt. I think this reflects good strong performance. We talked way back earlier in the year about a relatively flat margin profile for the year, so it's a bit of a change from prior years.

So seeing the fourth quarter come in higher than it has in the past is in line with an expectation. Let me add, the Aquilent is really not a material plus or minus for the quarter and for this year. The benefit comes in next year.

Thank you.

Carter Copeland, Barclays.

Good morning, gentlemen. Just a couple of quick ones. One, just sort of noting on the capital deployment and the balance commentary, I think it's probably worth noting the stock clearly has a benefit priced in associated with potential tax reform and the lower statutory rate.

How does that influence the thoughts around share repo in the short to medium term? I'm just interested in how you think about that given it could cut both ways.

And secondly, on the headcount it looks like if you exclude Aquilent you are up about a little over 100 heads. Horacio, I wonder if you could, that's the net number, I wonder if you could give us some color around the gross adds versus attrition, where you are adding versus where you are seeing declines? Thanks.

This is Lloyd. Let me take on the tax ramifications.

Whether it's a benefit to us in tax reduction or movement of interest rates, I would say all of that contributes to our philosophy around capital deployment going forward. Our crystal ball is probably as good or as poor as anyone else in terms of the timing of when we would expect to see these potential tax reductions.

So in the near term we feel like we've got the right tools and we are applying those tools as best we can. In the longer term we feel like our capital deployment strategy will accommodate changes that may occur whether it's tax or interest rate increases. So that's how we have factored in the potential tax and interest rate movement in the future.

On the headcount question, Carter, to clarify something, Aquilent is a subsequent event to the quarter. So the 440 number that I think Lloyd talked about is not including that. It's all organic.

So we actually feel pretty happy about that if you look at the numbers. That's a marked difference from what we've seen the last few years. And I think it bodes well for our growth opportunities.

And the growth is coming in all the areas that we've been talking about on these calls around Vision 2020 and the places where we see a great deal of opportunity. And over and above that we are also moving people internally to the places where there are opportunities. As you know, this is one of the things we pride ourselves with doing quite well is trying to figure out where the puck is going to be and not just skating to it but sending hordes of people in that direction, and that is what we have been up to.

Yes, I guess the question is where are they coming from? Where are the declines I guess is the question.

In our business we don't quantify it that way because a lot of what we do is we move people around from areas where we see less opportunity to areas where we see more opportunity. And that's actually a pretty fluid thing, and at this moment the interest thing, the heartening thing is we are seeing opportunity just about everywhere. So we experience natural attrition like the rest of the world does, but I think in terms of headcount it's pretty good across the board.

Great, thanks gentlemen.

I am showing no further questions. I will now turn the call back over to Horacio Rozanski for closing remarks.

Thank you everyone for your questions and for joining us this morning. We have two months left in the fiscal year, and we as we have been talking about intend to finish strong and importantly carry our momentum into FY18.

Lloyd and I are proud to represent the exceptional work of our 23,000 colleagues each quarter on these calls. And Booz Allen is now on its early growth path and the entire firm is feeling optimistic and energized about the opportunities that lie ahead. With that thanks again and have a good day.

Thank you. Ladies and gentlemen, that does conclude today's conference.

You may all disconnect. Everyone have a great day.