Booz Allen Hamilton Holding Corporation (BAH) Earnings Call Transcript & Summary

Hello. Good afternoon, good morning, good evening wherever you are in the world. Thank you very much for joining us. I'm Jon Raviv, Citi's aerospace and defense analyst here for the, actually, sixth and final entrant in our government track here at Citi's Global Technology Conference. It's day 1 of 3. We have over 200 companies presenting and involved in this virtual conference here. Again, this is our government track, thus, they have me, the aerospace defense analyst here. We're very pleased and very honored to be joined by Booz Allen Hamilton, one of the leading providers of solutions to the federal government and also that I mentioned also foreign governments and also commercial companies really delivering technology solutions for a rapidly evolving set of challenges that the government sees. So again, it's really a pleasure to have here Lloyd Howell, the CFO of Booz Allen Hamilton. Some -- maybe fourth or fifth year in a row at our technology conference, first time doing virtual, but nevertheless very pleased to see you, Lloyd. Thank you for being here.

Thank you very much, Jon.

Absolutely. And so maybe, so in the next little bit, we'll just have a little conversation about what you're seeing in the market where Booz Allen is playing a role and also kind of what's to come in the future. So I'll just start off with this being a technology conference, can you describe the technology you consider core to your company? How have you built it? And maybe give us a tangible example of that technology, like perhaps something in what you've termed option value.

Sure. For us, this has been a 7-, 8-year journey from when we commenced our Vision 2020 strategy, which really was pushing away from pure program management into more of a portfolio that offered technical solutions. At that time, 8 years ago, we recognized that pure program management was turning into a commodity. And at the same time, many of our clients, if not, all of them were in need of modernizing their IT infrastructure, which increasingly so remains the case today. What that looked like from a capability standpoint was cybersecurity, data analytics, system and software development and engineering and science. And though many of those areas are maybe taken for granted, along the way, we have been the recipient of doing some really cool work for many of our clients and the demand continues to grow, so much so that now ideas and work related to artificial intelligence are increasingly becoming more and more in demand. And at a minimum, clients are asking questions as to what is it, how might it apply to their particular situation, and we're involved in those discussions. So we see this continuing. And I know we're on the cusp of a presidential election, but it's also clear that both parties recognize that modernizing the IT infrastructure of the federal government is increasingly a priority.

Yes. And when I think about the opportunity to deliver more capability for same or really lower cost -- and that's not just IT. That's across mission sets. In your mind, big picture, what is technology really enabling in that sense and in terms of what enables the customer to accomplish? And then also, what is it enabling for Booz Allen Hamilton to accomplish given that you referenced, the company is like different over the last, I guess, going on a decade almost to that almost different playing field? Is it new capabilities, new business models, new addressable markets for Booz Allen perhaps?

Yes. In many ways, this is inevitable. The IT, federal workforce has been retiring in a faster and faster rate. Much of the current IT infrastructure that supports the federal government is legacy in nature, built on languages they no longer teach at academic institutions and certainly not a workforce that's as large to support many of these legacy architectures and systems. So it's only -- the technology alone, I think, is driving many of our clients to take advantage or at least apply some of the advancements that are out there. And therein, I think, lies the opportunity for a company like Booz Allen. So in many ways, we're helping our clients accomplish more with less. The first part of less is that they don't have the IT workforce to support their current systems. At the same time, many of their operational and mission requirements have grown, and we think many of our clients have struggled with how do I do and address these increasing and growing requirements with less, and technology is seen as a way to do that. As an example, artificial intelligence, our experience goes back well into the 2000s, with the wars that were being conducted at the time, the introduction of drone technology to address those conflicts. But the good news that it was successful in the battlefield. But the challenge it represents is you have that many more sensors feeding that much more information and data to human beings that, frankly, aren't equipped to be that accurate and not precise to their leadership. And so working side by side with our clients, recognizing this challenge, offering up solutions that at the time were termed machine learning has now grown into artificial intelligence. Many of our clients were able to repurpose those troops to acquire new skills and at the same time, increase the accuracy and efficiency for the decision makers. And that is, I think, a perfect example of how we go about doing what we do and not just sort of catching a fad at the time but really working with the clients over a number of years to meet their objectives.

It always occurs to me that Booz Allen Hamilton is well positioned to have conversations with customers when there are things that are changing. And it's not just -- it's not really an election or a budget question, but it's almost just an ecosystem question. So to what extent, in terms of demand for what it is that you provide, is that -- how does what you provide fare in a post-pandemic environment, in a flattening budget environment, in a shifting priority environment and an environment where there's more emphasis put on delivering services to citizens in this country rather than finding things externally change. So how is Booz Allen really positioned to address that kind of changing environment?

Well, I think it starts with our heritage as a management consulting firm. We're actually trained to talk to our clients, engage them in discussions about the art of the possible, taking advantage of new technologies, new process, new talent, how that might apply to their situation. And all of which is done in the absence of a formal RFP process or procurement. And what that has enabled us to achieve is being seen by our clients as a trusted adviser not just out for a buck but really what advice counsel support can we give them to help them meet their particular needs or meet their requirements. And so many of the discussions and ideas that we come up with, with their support, don't necessarily make it to reality. But those that do tend to be very effective in terms of helping them to do what they need to do within the budgets that they're trying to work within. And so whether it's AI, cybersecurity, all of these things don't happen overnight. It's an evolution. And we, given our tenure and presence in the market, are typically there along the way. And so we're not, again, chasing a contract to chase a contract. We're really thinking about what does this client need to be doing, what can they take advantage of going forward.

Talking about competitive environment for a moment. So first question would be on this topic. Again, large technology conference here, again, over 200 companies participating over 3 days, some of which I'm sure you partnered with in some respects. I don't want to name names, but Microsoft is here. So how do you interact with those traditional technology providers, whether they be hardware providers or software providers? Are they competitors? Are they partners? Are they both? Where does Booz Allen fall in that ecosystem?

Yes. I think we partner well. Part of our objective with our Vision 2020 strategy was to increase the number of corporate partners that we've had, strengthening those relationships and then jointly come up with solutions that we could bring to the market. Today, we team with Microsoft, Amazon, Google, you name it, because that is in the best interest of our clients. And I think with any successful partnership, it's that both entities are bringing to the table strengths that the other doesn't necessarily have. The strengths that we have that -- I don't want to speak for Microsoft, but I think is attractive to companies like Microsoft is our history, our insights, our knowledge, really what the operational requirements are but also the journey that many of these clients have been under or going through and how best to then make the translation to the next solution. And so it ends up being a win-win in the eyes of the client. And I think for any of our corporate partners, it basically plays to what we're most confident in and what they're most confident at. So we don't typically engage in any sort of exclusive relationship because not every partner is suitable for what clients are trying to achieve. But that flexibility has allowed us the team and partner with everybody, and I think it's been a great relationship along the way.

And then talking about the competitive side of the ledger, I'm assuming you're not really competing against Microsoft head to head. Really, it's more partnership rollouts, so I suppose. But again, Booz Allen has changed, as you mentioned, the kind of things that it does over the past decade with Vision 2020, supporting that shift. So in that -- with you changing what you're doing, I have to assume you're changing -- or who you're seeing in the room, virtual room, whatever you want to call it, when it comes to competition, also changes. So how has that competitive environment shifted? Who do you see more of? Who do you see less of? Just to give us all a sense of maybe who you should think about you in --as comparable, or maybe someone who would say, "Oh, you're right, Booz Allen competes against them." So any thoughts there?

Sure. It varies by market. So we tend to see our peer group, for the most part, across all 3 markets. That being said, we see Deloitte Federal increasingly so in our civilian federal market. We see Accenture from time to time in defense and civilian markets. We see Palantir a little bit more episodically in defense and civilian markets. So we are seeing, from our perspective, newer companies but not at the same level that we see a Leidos, an SAIC, a CACI, ManTech and Perspecta. And frankly, depending on the specialization of the need, we see companies that are probably more commercially oriented, smaller in nature but may have a specific attribute or skill set, say, in AI. And in that case, they're either a teaming partner or they have, specifically, a task in the eyes of the client that they are going to perform.

When you look at the market, I mean, it's hard to put our finger on what the market is doing precisely, but Booz Allen Hamilton has pretty consistently, for longer than a lot of folks or peers, I should say, delivered robust organic growth. So what has been enabling you to deliver that high single-digit, low double-digit, depending on the quarter, organic growth that we've seen? And really how sustainable is that performance? You have the concerns around slowing spending rates, shifting customer priorities, as we talked about earlier. So how sustainable is that kind of performance do you think?

Sure. So 2 components to it. The first is having a very robust backlog and demand. If you look at our backlog performance over the years, certainly, has been growing at a nice clip with the type of work that we would like to be performing, and from our perspective, certainly not constraining us from achieving either what we forecasted in a given fiscal year or the trajectory that we've been on. Number two is our ability to source, recruit and onboard the talent with those skill sets to convert that backlog. And so our recruiting engine has been very solid over the years. It's allowed to add to our workforce somewhere between 4% and 5% every year, and that's something that is important to us given that we see ourselves as a people-first business. In terms of sustainability, I would just point you back to our history in this market where we tend to outperform the overall budget growth by 2% to 3%, both in certain and uncertain times, depending on who you talk to or maybe entering one of those cycles at the moment. And it's really a function of do you have the backlog, do you have the relationships to kind of ride through that uncertainty, and we feel that we do.

Do you see coronavirus -- so aside from those macro issues we talked about around the pandemic and shifting priority steps, so do you see coronavirus changing or impacting, accelerating, decelerating any particular things that you do? And I also -- I ask that in the context of your health business as well. It's not a specific segment or anything like that, but I think you do run a sizable book of health-related activity. So on -- to the extent that the pandemic is probably the #1 talking point in the executive range today and will probably continue to have a role in a lot of conversations for a while, what does Booz Allen Hamilton bring to the table in terms of essentially fighting a war against public health emergency such as this?

Yes, I mean, so as it relates to the virus specifically, anyone's guess, but we certainly consult a lot of internal and external health professionals as to what the latest thinking is about the virus, spikes and duration. And we factored that into how we thought about, certainly, this fiscal year our workforce and beyond. And given the uncertainty of the virus when vaccines may become more prevalent, the investment that we made and the resiliency fund for our people, their care, we thought it was the right and feel that it is the right thing to do to kind of ride through that uncertainty. Number two, we've been in a constant dialogue with all of our clients because they're people, too, and also were struggling with how best to ensure the safety of their workers. And so those conversations, I think, have allowed us to keep pace with support, not really having things slip through the crack and then making adjustments if circumstances are to change. Hand in hand with that, we have seen in the current procurement environment kind of modifications to existing work related to the virus by about $20 million, and at the same time, new opportunities tied to the virus to the neighborhood of about $30 million, all the while still, primarily through our health business, talking to clients such as CDC and other parts of HHS about what we can do to help support them as they analyze the virus, come up with potential solutions and basically nonexisting contracts to do that. So I know it feels like we've been in this situation for years. It's actually just been months. But I would say, much to everything else we do, our clients have looked to us to be advisers and support, and we've responded in kind.

Can you talk about investments for a little bit here? So of the investments that you've made, where are those investments going? What is it about them that result in sales and also margin opportunity? And then how do those requirements -- or how -- when you think about embarking on investment, how does that -- how has that impacted or colored by, again, a shifting priority conversation? So what is that investment start? What are they focused on? And is there some change upon us given budget dynamics, political dynamics that makes you say, hold off on that for a while and see how this plays out here?

Yes. Maybe just a point on definition. When we talk about investments at Booz Allen, ultimately, we're talking about how people spend their time. And so if we're asking Lloyd to invest in a particular area, it's devoting time away from billable work or building out white papers, building relationships, conference attendance, things of that sort to basically determine whether there's an opportunity out there that ultimately will lead to some sort of financial return. We do that every year in the main of our business. So whether it's AI, cybersecurity, we're constantly asking people to think about the future, engage their current and potential clients about what's possible, and then through the formality of the procurement season, see if that actually turns into a financial return. Longer term, many years ago, we developed a concept around option value, and that's a place or an area that's driven by our innovation group. We have 4 initiatives that have matured to where we're actually beginning to see a financial return on the initial investment. One is a reservation system on rec.gov for the Department of Agriculture that basically allows citizens to reserve in national parks camps or take advantage of other services; District Defend, which is a -- securing mobile devices for many of the work -- much of the work that's done in the intelligence or classified areas; Directed Energy, which is basically taking laser and sonar technology and putting it on smaller platforms; and then Modzy or artificial intelligence, which has got more of a commercial application to many of the things that we do federally. So those areas are showing a lot of traction, and we've been pleased with the progress to date.

And so for something like, let's just say, [ grabbing ] and I know rec.gov has talked about a lot, but I also think it's probably one of the most -- probably the most tangible from a regular person perspective, right, because you can just go to your computer. I encourage everyone listening and watching right now, go to recreation.gov and book your National Park visit and wash your hands, too. Is there a -- what does the business fall around the recreation.gov type tool? And how far -- and to what extent can that be extended to other agencies, other people -- other agencies that have to interface with the citizens? And is this something that can contribute to that margin story that you still play out here?

Yes. I mean the pursuit of rec.gov was driven by a couple of things. One was diversifying our delivery model. Today, over 90% of how we support our clients is through labor. And rec.gov represent an opportunity for us to develop a solution, in this case, a reservation system on our nickel, and then over time, recoup that initial investment in a fee arrangement with the government and at a higher margin than we would see otherwise. And thank you for the plug, but it has played out better than expected just given COVID and the fact that we haven't done a lot of that. We think there's a potential for greater application of that beyond just reservation systems. The federal government, interfaces with taxpayers in a number of ways, and if we can develop similar solutions that, a, scale but also achieve a different economic performance than what we would with a 100% labor model, that's an attraction -- attractive to us for diversification, financial reasons. We're very excited about where that's going.

Yes, think about all the things you try to do with the federal government as a citizen and how you pull your hair out, thinking like how could this actually -- why doesn't it work? So here's an example of something that actually works and hopefully can be extended farther for citizen engagement, quite frankly, which is what we need. If you have more business models like -- I mean, so there's more to know beyond the margins than just rec.gov, obviously or perhaps even that business model. So how should we think about margin performance big picture going forward? What is the long term -- or is there a long-term upside to that, we'll call it, low 10s that you've always talked about here? Maybe it's mix shift. Maybe it's the underlying you already have in your book. Maybe it is really the new business models. But what is the upside there? Or what is the -- how does that unfold?

Yes. We're certainly working our way through that as I speak. We're in the third year of our current investment thesis that we've guided to dock the ship this year around 10%. And which is an improvement from where we started 3 years ago, which was sort of in the mid-9s. We got there through a variety of ways, certainly, the continued mix shift to the higher-margin offerings that I talked about earlier but also just operating and executing the business a lot more tightly than we ever had before. We've got -- our business leader is not only focused on the top line, but also profitability and having greater sensitivity to the margin. And so a combination of lots of little things have contributed to where we're at. As I said, we're in the midst of trying to figure out what that looks like going forward. I will say that many things that we have done so far, I think, are truly institutionalized. The wildcard or the thing I can't answer at the moment is when we might invest again in the business, which typically is a headwind to margins and also consistent with what we've done over the years, which, I think, in the long run, plays to everyone's advantage. So we feel good about where we are. We feel good about what we expect to happen this year. But certainly, we'd like to improve not only margin but top and bottom line performance as well.

And I suppose part of that time, that story is also going to involve a mid- to long-term strategy. We're in the third and final year of the investment thesis you laid out again a few years ago at your Investor Day. We're also in, maybe you could say, is the ultimate year of Vision 2020, it being 2020. We're not going to roll it out here. But as you think about what comes after Vision 2020, what does the menu look like? What are some of the options you consider when it comes to a strategic plan? And to the extent that Vision 2020 -- at the time, I don't know, you tell me, it was not message as a slight shift. Maybe answer that question. Is it going to be as much of a shift as Vision 2020 was? Or is it going to be almost a refinement on that because the trends identified in Vision 2020 continue to play out here?

Yes. I mean the answer, I think, I have to take you back to what the context was when we put together Vision 2020. I mean we're [ sawing ] an overall contraction in the market. The budgets were shrinking. There was an emphasis on cost by the administration. So it was really primed for a reset of where Booz Allen was and where we needed to go. And so to your point, the shift was fairly dramatic, over nearly 100% of our business being program management to now that being far less than what it was. Today, I think we have a lot more tailwind even as we go into some of these uncertainties that we had back 8 years ago. And so with that as sort of a starting point this time, I would expect that there would be refinement, more emphasis on adjacent capabilities, markets to what we currently have been prosecuting. I think at the same time, diminishing our exposure to certain areas, certain markets that have run its course, at least from our perspective and a reshifting or redirecting of resources to those capabilities and markets that we think have a lot higher potential. And so I think from an operating standpoint, that's what we're working our way through. I think at the same time, getting a handle on what scenarios externally will we be waiting into. We certainly were presented with a decline that then precipitated the creation of Vision 2020. Now with that many more years of experience, we've got a couple of potential scenarios out there, either a flattening or declining budget. Some say even maybe a modest increase. What is that going to look like for the next, call it, 3 to 5 years? And how will we compete within it? And so that's all of the sausage making that we're currently going through. We expect to be able to showcase that in the first half of next calendar year. We wanted to do it sooner. But we've got a presidential election. We think it's important to know how that kind of plays out. And once we're beyond that and have a sense of maybe where the budget discussions are going, we'll feel a bit more confident to kind of lay it out in greater detail. But that's what we're going through. And as soon as we get past some of these current uncertainties, we'll be ready to showcase it.

Yes. Hopefully in person sometime in 2021 also, probably nice. This is so bad. I have no time. On cash generation, what steps have you taken to improve cash generation? And how is the cash conversion impacted by some of the investments you've had to make, including CapEx?

Yes. The cash generation has been a work in progress over the past couple of years. I certainly wasn't pleased with where we were at. Many of our investors also were questioning, "Hey, what's going on there?" So we've made a couple of changes. One was the overall management of the process, the process itself. We brought to the attention of our business and market leaders that this could be a priority. So we've had that in the forefront of their thinking. And then on the receivable side, we improved our relationships and communication with many of the payment offices and our clients as well as balancing that with the payable side. So over the past couple of years, we've done a much better job. And in fact, this year, we raised the guidance to be between $550 million to $600 million, up from how we exited FY '20. In terms of CapEx, certainly in the midst of COVID, we brought our guidance down for what we expect CapEx to be. I think we exited FY '20 around -- we're in $128 million, something around there. This year, we're forecasting between $80 million and $100 million. And really, that's a function of many of the IT modernization efforts that we have underway, first, initially with our human capital management systems and now most recently with our financial. And we see that as just good investment in our infrastructure for our people as well as our clients. And so that's what's driving our CapEx and our cash generation.

And then when -- in terms of uses of that cash, how are you tracking against it? When you've laid out the investment thesis, you've had some buckets of maybe guidelines around what you want the capital allocation to look like over 3 years. How are you tracking versus those multiyear deployment goals? Noticeably, I think you have ramped up a bit on some activity, but you still have a decent amount of cash on the balance sheet. Understandable during a pandemic is why I'd say you'd wake up for your employees. But yes, what does capital deployment at this stage look like?

Yes. I mean we like the levers that make up our capital deployment, share repos, our regular recurring dividend, capability tuck-ins and the possibility of a special. We think that gives us the right levers to pull given market conditions. We also feel it gives us the right flexibility given what may happen. We continue to target $1.4 billion. We continue to be disciplined and patient, just given the overall volatility from almost day-to-day, week-to-week that takes place. But those remaining -- the levers to pull, the buckets, as you say, and we think it's served our investors both in the near and long term well.

And you're pretty vocal on -- I don't want to say what we perceive there to be a little more leaning into the idea of taking advantage of market dislocations, Booz Allen Hamilton having a good amount of cash, a strong balance sheet and whatnot. How -- what kind of was spurred that -- again, what was perceived as a leaning into when it came to capital allocation. [ Loud on ] why you took it as an M&A conversation, perhaps, but can you just give us some sort of insight or perspective on what drove that conversation?

Yes. I would agree with you. It's certainly picked up as an M&A emphasis. From our perspective, it was articulating and affirming what our capital deployment strategy has always been. And I would offer others backed away from emphasizing M&A. And so our consistent message, I think, sounded a lot louder than maybe we had certainly intended. But the bottom line is we continue to look at over 100 opportunities every fiscal year. We feel we're well positioned financially given our capitalization, cash from the balance sheet that should the opportunity come along, we can do a deal. So we don't feel constrained financially. And we feel that we're cultivating the right opportunities with ongoing discussions that we're having with potential companies. And at the same time, we expect there to be an increase in volatility, overall. And whether that translates into companies moving up their time line for a potential transaction, we want to be in a position to do that deal should that come to pass. So that's what we were saying. That is our intent, and we feel that it's very consistent with what our capital deployment approach has been from the very beginning.

But at the same time, the industry has seen a lot of [ SCR ] or I should say, a decent amount of M&A activity. Booz Allen Hamilton has remained noticeably quiet. It doesn't mean that you haven't done deals because what we've done is smaller and maybe more spaced out. What is your perspective on sort of Booz' or your company's approach to those sorts of inorganic opportunities versus others? Is there something structural, unique? Really, why would I go and -- why would I -- what we're doing here is going really well, so why do I have to go and bring in something else? Can you sort of lend some perspective on that?

Yes. I think it goes back to what is the company's corporate and financial strategy. And our corporate strategy has been to emphasize organic growth, be that organic sector leader. We feel that we've been able to achieve that. By the same token, when we do see an opportunity that is pure capability play as it can be, we want to add that to the mix as well. And to your point, we haven't seen many come along that have been either consistent with our corporate strategy or once we get into the due diligence are as pure as we would like. So we are guilty, maybe to a fault, of being pretty picky and pretty conservative when it comes to the deals that we've done, but we also feel that they were the right deals to be done. Now on a go-forward basis, as I mentioned, we also want to be cognizant of what's happening in the overall market. And should there be an opportunity to add to our portfolio on an inorganic way, we want to be positioned to do that. And I think therein comes our financial strategy. So having the capital, having the resources where that's not an impediment, we feel pretty good about that. And you're right. I mean our sector has gone through at least 2 rounds of consolidation. We think there are lots of reasons behind that, not all of them common. But from our perspective, with what we've been able to post organically, we haven't felt the need to do transformative acquisitions. We felt capability buys or tuck-ins were most appropriate. And we still feel that way going forward.

And then another piece of your business, which is relatively small as a percentage, it's commercial and international taking some of those expertise you developed on the federal side, reengaging with commercial and international [ labs ], the expiration of [indiscernible] several years ago at this point. What are some of the drivers in that market? I know earlier this year, you identified some softening growth there after some really strong growth years as well. But what does the future of that opportunity look like? And I know it's relevant to a lot of folks on the line and to yourselves because those markets do tend to come at a higher profitability rate. You have the capability. Might as well bring it to a market that might need that capability. So how is that market going with this?

Yes. Leaning to this year, especially with COVID, really not certain where the commercial market was going to go. The reality is that it's off to a much stronger start than we initially expected. I think in the first quarter, it was up about 9%. And that has really been fueled by the fact that cyber adversaries aren't slowing down their activities. And many of our commercial clients recognize that and have maintained a level of support that certainly has been great from our perspective but I think is really a reflection of those clients themselves recognizing they can't relax or not invest in their cyber protection and defenses. So our primary offering is cybersecurity. We still feel it's in great demand. We are still seeing growth, albeit a smallest percent of our overall portfolio. But to your point, it also represents 2.5 to 3x better margin performance than what we would see with our federal clients. To connect the dots a bit, should we see inorganic opportunity to add to that business, we also want to be in a position to take advantage of that pricing and multiples notwithstanding. So it's all a part of growing the enterprise. We think we've got the right team, the right client relationships. And so we're optimistic about that business continuing to grow and contribute to the overall performance.

And then last for me, and again, thank you, Lloyd, for being here. Last 3 minutes. You talked about talent and people, the importance of people in a business like yours, the changes you've made to attract and retain that top talent and then also a bit on what are the broader challenges that you're seeing. And perhaps I'll also include in that question the diversity and inclusion and progress conversation, which I know is a big point of emphasis on your last earnings call as well. So talk about Booz Allen as a people business and why, at the end of the day, if you don't have the right people, when you're not getting the right people or attracting or recruiting the right people and broadening that net out as much as possible, it's sort of all for naught.

Yes. I mean it is the single most important thing at Booz Allen. At the end of the day, we are a people business, we always have been in our 100-plus years of existence. And so virtually on every topic, we pick it up first from a people perspective and then build upon that. And examples of that started with COVID. Before anything else, Horacio, myself and our leadership team, we were consumed with how do we protect our people health-wise as well as financially. And that led to the creation of our $100 million resiliency fund to not only support them through the uncertainty but also their dependents and significant parts of our community, so ensure an investment right out of the gate in our people. And then similarly, with the racial injustice activities that are out there and the fact that many members of our workforce were hurting, we felt it also equally important to address that, not only financially but also standing up programs that existed but maybe were far along as we wanted and engaging our entire workforce in that discussion, which is currently ongoing. All of which, again, we see as the right thing to do and investment in our people. What that looks like, if you will, in terms of return as we have been able to continue to add to our workforce, we had a good showing in the first quarter, albeit maybe a little bit lower due to the pandemic. But our sourcing, recruiting engines are alive and well. We continue to add to the workforce month-over-month. And so that is critically important when it comes to us achieving the top learning growth and converting the backlog that we have. At the same time, it's a hugely competitive job market. So whether it's Citi or Booz Allen, we're all pursuing this type of talent, and so not only attracting but retaining them is critically important. So the things that we've done up to this point, we just think are smart in terms of not only our people but the business and our clients.

It's vitally important, and it's a good note to end on, remember -- reminding or recalling, at the end of the day, what a company exists for. So again -- and especially yours. So again, Lloyd, thank you very much for being here. Thanks for all your efforts here. Best of luck to Booz Allen Hamilton going forward. Thank you to everyone who's joined us here virtually. Stick around. There are a lot more companies. It is the end of our government tracks. You won't see me anymore but a lot more companies addressing all sorts of things, technology world as I look at this agenda. But again, thank you very much for being here. Again, it's Jon Raviv from Citi saying have a great afternoon.

Thank you, Jon. Thank you, Citi.