Ladies and gentlemen, thank you for standing by, and welcome to the Booz Allen Hamilton Fourth Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After speakers’ presentation, there will be a question-and-answer session. [Operator Instruction]. Please be advised that today's conference is being recorded. [Operator Instruction].I’d now like to turn the conference over to your speaker today, Nick Veasey. Thank you. Please go ahead, sir.

Thank you. Good morning and thank you for joining us for Booz Allen's fourth quarter and full fiscal year 2020 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 2. I'm Nick Veasey, 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, Chief Financial Officer and Treasurer.As shown on the disclaimer on Slide 3, please keep in mind that some of the items 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’s services and other factors discussed in today's earnings release and set forth under the forward-looking statements disclaimer, included in our fourth quarter fiscal 2020 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 the 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 fourth quarter fiscal year 2020 slides.It is now my pleasure to turn the call over to our CEO, Horacio Rozanski. We are now on Slide 5.

Thank you, Nick, and good morning, everyone. Thanks for joining the call. I hope that you, your families and your colleagues have been healthy and safe since we last spoke. It’s been eight weeks since we Booz Allen's fiscal year 2020 ended. But March feels like a distant memory, given all that has transpired since then. Our world, our communities, and our institutions have taken drastic, necessary steps to respond to the COVID-19 pandemic. Its toll has been unlike anything most of us have ever experienced in terms of illness, lives lost and economic hardship. Well, first responders, doctors and nurses and all essential workers have inspired us with their actions. From everyone at Booz Allen, our heartfelt condolences to those who have lost loved ones and our deepest gratitude to every single person on the frontlines and to their families.Without a doubt, the worldwide mobilization against COVID-19 has dramatically changed the way we live and work. And so, this morning I will begin by discussing Booz Allen's response and approach going forward. Then Lloyd will build on these themes, while providing the details of our fiscal year 2020 performance and our outlook for fiscal year 2021.Reflecting back to early February, when COVID-19 began spreading across the globe, our firm immediately organized a crisis response team and committed to three overriding priorities: First and foremost, to protect the health and safety of our people, their families and our communities; Second, to continue supporting the critical missions of our clients; And third, to ensure the financial and institutional resilience of our firm.These priorities have guided every decision since then, including our move to mandatory telework on March 17th. They were also at the center of our resilience program, announced on April 1st. We took bold action, creating a $100 million pandemic…

Thanks, Horacio, and good morning, everyone. I'll start by echoing your comment about our excellent operational and financial performance in recent years. This track record has positioned Booz Allen to not simply react to the challenges of this pandemic, but to proactively address the key opportunities and risks that emerge from it. We are managing the business to ensure long-term strength just as we have done in the past with things like budget sequestrations and government shutdowns.We are investing in our people and allocating our resources efficiently as we strive to continue generating industry-leading organic revenue growth. Importantly, and as Horacio mentioned, our strength of execution has again supported an increase in the three year ADEPS growth target in our investment thesis. I will discuss this in more detail when I cover fiscal year 2021 guidance, but first I will provide an overview of our fiscal year 2020 results while highlighting the expected performance impacts of COVID-19.Our fiscal year 2020 results are shown on Slide 6. At the top-line, revenue increased 11.3% to $7.5 billion while revenue excluding billable expenses grew 9.9% to $5.2 billion. This double-digit organic growth was the result of both sustained demand for our services and solutions, and an increase in headcount to meet that demand.Turning to Slide 7, our fourth quarter book-to-bill was 0.4 times which is somewhat lower than what is typical for our Q4. As I noted during the earnings call last quarter, we are building on our strong foundation of diversified small awards by pursuing larger, more technically complex bids. This has naturally increased the volatility of our book-to-bill metrics. Nonetheless, we have entered fiscal year 2021 with enough client demand to continue growing in line with our investment thesis targets.Demand for our services and solutions remains healthy, particularly in defense and…

Thanks, Lloyd. The past three months have been incredibly challenging for our firm, our clients and our country. What stands out for me though is how individuals have rallied to support each other and to carry the burdens together. I'm incredibly proud of how the people of Booz Allen have responded at work and in our communities. From making personal donations that supplement our corporate contributions to food banks, first responders and military families in need, to volunteering with local charities and making face masks for colleagues, we’re showing the best of Booz Allen. It shines through in their work as well. Allow me to give you just a few examples.One of our associates Sarvesh Nalluri is the heart and brain behind the data visualization project that is helping the Veterans Health Administration prepare for a possible surge of the virus in rural areas. One of our epidemiologists, Dr. Sumiko Mekaru worked on her own time with other scientists and researchers to build an openly available global COVID-19 pandemic map. She is now creating models and dashboards that will help leaders at the DoD and Defense Health Agency maintain readiness. And elsewhere in the Department of Defense, we have a team that worked around the clock for six days to move critical pre-deployment training of soldiers that is usually done in person to a completely virtual environment. Since the beginning of April, about 3,000 soldiers have received this live virtual instruction, a mandatory course that helps keep them safe while deployed.And finally, because May is Military Appreciation Month, I'll mention [Monique DiChiara] a cyber security analyst from our office in Lexington, Massachusetts. [Monique], like many others at our firm, is a member of the National Guard. She was recently activated to assist with the COVID-19 response, and led a contact tracing mission for her unit. We are so proud of her service to our country and are delighted to have her back. These and many other individual stories demonstrate the values, hard work and dedication of this firm. We're a company that mobilizes to meet any challenge or opportunity. Over the past three months, our mantra has been in it together. It conveys unity for sure. But more importantly, it underscores our institutional strength and resilience, the very things that create value for our investors and all stakeholders.So I'll close with a big thank you to the people of Booz Allen. You amaze me and inspire me each day. It is my distinct privilege to represent your work on these goals each quarter.With that Nick, let's open the line for questions.

Thanks, Horacio. Operator, please open the lines.

[Operator Instructions]. Our first question comes from Sheila Kahyaoglu with Jefferies. Your line is open.

Hi, good morning Horacio, Lloyd and Nick and thank you for the time. Horacio, this one is for you. In May you were awarded a rather large task order under the Alliant 2 contract vehicle to support the DoD’s Joint Artificial Intelligence Center. I think this is the largest JAIC award to-date and Booz’ second largest AI program just following eMAPS in 2018. I guess this was rather unexpected for us, were you expecting it? How do you think about contracts like this relative to your revenue growth framework? Maybe if you could tell us more about it?

Sure. Good morning, Sheila. And thanks for the question. We're obviously very pleased to have been awarded this contract. It was part of the competition and we're just very glad. As I always say on the calls the size of these contracts or task orders is important. But for me equally important is the actual content and the strategic value that they create. And in this particular case, this is an opportunity to support the JAIC, as they accelerate the deployment of artificial intelligence broadly across DoD and obviously it's a mission that’s near to my heart and to the people of Booz Allen, and we care about it deeply. More broadly, I think it's another proof point of our strategy as the leading provider of technology solutions to our clients. And it demonstrates that our strategy works. Artificial intelligence in general is a great example because it's both an opportunity to grow a workforce in our traditional business that scales around these new technologies and to create option value in this case with our multi-program. So all-in-all, very, very pleased and we look forward to more.

I guess I'm going to ask another follow up related to AI. Given I know that that's a focus item for Booz, as you start planning your next growth strategy, how do we think about the impact of COVID? It seems the focus right now is more on veterans’ health and tracing. Is there a larger COVID opportunity when it comes to AI?

I think when you look -- like you got to put things in context. Right now, it's all about the response. Our clients are very focused on that understandably. They're leveraging both existing technologies and new technologies as rapidly as possible. I think as you look forward, the need that is clear, especially when you operate at the scale of our clients, is the need to have all of this information from these disparate sources fused together, available and ready for decision making almost instantaneously. And in my view, artificial intelligence is going to be part and parcel of that. It’s going to be a big deal. And that's why I'm so happy that we're both doing this work. But more importantly, we're also setting up the foundations for creating unified data environments and a lot of the things are going to be required to make this real in the long run.

Thank you. Our next question comes from Carter Copeland with Melius Research. Your line is open.

Hey. Good morning, gentlemen. Horacio, I wondered if you might expand on that a little bit in terms of the demand environment. You talked about that kind of reshaping in the aftermath of COVID. Who leads or directs that reshaping. Is that customer driven? Is that driven hand-in-hand partnership with you? Just trying to understand how you think that's going to evolve?

I think it's first of all too soon to tell exactly how it's going to evolve, right? I mean we're still in the midst of a response effort. As I mentioned before, we're going into what we view as a second phase and more prolonged phase. That is going to require a lot of rethinking of how things work. And then in the third phase, once hopefully this virus is behind us, there's going to be changes that are left, that we're beginning to see. I mentioned before things like the increased adoption of telehealth, the need for secure mobility, virtual reality training. All of these things are -- they were in the works already. What we're seeing is an acceleration in need and in desire to deploy these technologies. And we are positioned to help. This has been -- from the beginning of Vision 2020 -- 2012 this has been our mantra, is we want to be at the center of our clients’ mission bringing technology to solve new problems. And again, we're seeing demand across the enterprise from intelligence to defense, to certainly our health and civil business that relates to all of this.

Great. And just as a follow-up for Lloyd. You mentioned the qualification of research expenses and generating the tax credits impacting the 2021 effective rate. How much do you envision the tax law change in ‘22 reversing that a little bit? Any color you can give us there on the step up? Thanks.

Sure, good morning, Carter. As you know more and more of our work has been transitioning to the -- in area of -- technically advanced areas like software related engineering. So we had an opportunity to look at that. With our analysis that we mentioned last quarter, we reassessed our tax credits associated with our R&D expenditures going back to 2016 through 2019, and that yielded a net tax benefit of $38 million and -- recorded in the fourth quarter and excluded from ADEPS.Now going forward, it's, early to tell exactly what any changes there’d be and the impact on it, but we expect our effective tax rate as we indicated in our guidance to be between 20% and 23% in FY ‘21. And beyond that, depending upon, the IRS’ ruling to be in that range if not slightly below that given the reserve amount we made.

Thank you. Our next question is from Jon Raviv with Citi. Your line is open.

Horacio on those three areas that you mentioned, telehealth, virtual learning, secure mobility. Could you expand a bit on those? And sort of how those are playing out in the phase two? And how they might play out in phase three? And as you do, can you just talk about that pivot in the context of potential budget changes or budget priority changes? It seems to me that parties will change, but parties changing can actually be a place where you guys can really accelerate into some of these spaces. Thank you.

Again I want to qualify this by saying we are in the midst of a rapidly changing situation and everything around us is changing. The thing that seems to be clear to us is, this needs to accelerate implementation of technology to respond to the environmental factors is, if anything, accelerating. Telehealth has become a necessity, not just a technology that is in its infancy, but a technology that is being broadly adopted. How to do that, how to do that securely, the changes that, that poses to the handling and management of the information that is provided and how all of that happens is going to have lasting effects on the requirements to continue to drive that technology.On secure mobility, everybody is working from home. That creates entire new attack surfaces and tremendous opportunities for efficiency, for effectiveness, for resiliency. And we're right in the middle of thinking through that for our own organization and helping our clients. This is a place where we're hopeful that if technology like this will defend, which we've been investing in, as you know, for several years, will come to the forefront and be very helpful.And then in terms of virtual training, again, this is a trend that was already playing out, that is accelerating, and one where we have over the years invested significantly to be very relevant to our clients, especially as we were doing [ID] response and things like that. We saw a new generation, war fighters coming in that would be more willing to learn from gamified technologies to learn from virtual reality. We have a network of labs that we've created to support that. And again, as all of this evolves, where we will see increases in demand. How that will change within a -- any timeframe based on budget priorities? As Lloyd pointed out, as I pointed out, there's some level of uncertainty around that. But what I will quote you to as it relates to us is our ability to evolve and move rapidly from one opportunity to another because of the single P&L, because of our culture, we just respond quickly to ideas. We invest in things that make sense for long-term and hopefully that makes us build to last.

Yes. Thank you for that, and then just on the margin of roughly 10% you appreciate that FY ‘21 is encompassed by phase two, if you will, with several inefficiencies associated. If you could just somehow classify or characterize how much of that 10% guidance is being held back, if you will, by the inefficiencies such as the monthly impact from the lack of fee recovery. In the same context, how mix and commercial are impacting margins at this point? Thank you.

Sure. Jon, let me first recognize that we had exceptional performance in FY ‘20 Q1 through Q3, which really allowed us to allocate the resources in Q4, not only to Horacio’s point and improve upon our competitive positioning but also maintain the business momentum. And we see that and we're very pleased with that performance, despite the $10 million EBITDA COVID-related impact.Going forward, we still expect our portfolio to perform as it did in FY ‘20 and we're operating very well at the business and contract level. We feel our strategy is working. And we do have what we believe is a temporary headwind on the inability to collect fee in our -- some of our security and defense businesses. But we've taken that into account with our FY ‘21 guidance. And that's why we're affirming 10% EBITDA margins.

Thank you. Our next question comes from Cai von Rumohr with Cowen. You line is open.

Yes, thank you very much and good results again in defense and civil. But you saw continuing slowing in intel and basically a decline in commercial. Can you give us some color on what's impacting that? Is there much more COVID? And what is the relative prospects going forward for fiscal ‘21? Thanks.

Cai, good morning. I'll start and I'm sure Lloyd will -- want to add. First of all, the overall results as you know are quite good. Defense and civil are up to the tune of about 15% on the year which is slightly ahead of our expectations and we're extremely happy with that. We've been talking for the last couple of calls about the fact that our intel business was not adding people as quickly as it needed to. And we made some changes to accelerate that. And I think what you're seeing is a continuation of that trend. And while at the same time we're working inside the business to return to a faster talent acquisition model. And therefore, look to accelerate the growth in that business where the demand we believe is still there and still very robust.Our commercial business, we called it flat for the year. It was flat for the year. And I think inside of that are some turbulence and variability in our Middle East business and more robustness in our U.S. commercial business. And I think the prospects especially for our cyber-centric business in the U.S. and around the world are excellent. We probably will still see some spottiness and variability in other products. But overall, I am optimistic for our commercial business as we look forward.

Thank you very much. And then a quick one for you, Lloyd. So the $6 million EBITDA per month, that's basically like close to 100 bps on the margin year-over-year. My understanding from other contractors is that the CARES Act did not reimburse for costs incurred prior to its passage, but was expected to reimburse for costs afterwards. Could you give us some color on what's in the $6 million? And where are we with what the act actually says? Thanks.

Sure. Essentially as we said in our prepared remarks, it's really complying with the CARES Act and our inability to invoice for fee. Now, that being said, we're constantly in conversations with our clients. We are optimistic that this is a temporary dynamic, but we thought it was appropriate certainly in terms of the FY '21 guidance to do our best to take that into account. As Horacio said, we've got some unknowns and this is one of them. But we've provided a range that we think acknowledges the possibility that at some point in the future, the government will begin to pay on those invoices.

So have you assumed it goes to the entire year or not?

As I said earlier, we did our best to include it as part of the year. But we feel that looking out 12 months, there could be the potential for that to turn in the other direction.

Thank you. Our next question comes from Edward Caso with Wells Fargo. Your line is open.

Good morning. I was wondering if you could update us on your optionality efforts. What have you seen -- what have you been able to capture so far? And again, remind us how you hope to capture them either through sales or annuity streams? Thanks.

Sure, Ed. I'll start. As you know, at this point, we are focused on four distinct initiatives inside of our portfolio that are the largest and then a number of things that we're building behind that. And the four are Modzy, which is our artificial intelligence platform and marketplace; our directed energy efforts; recreation.gov; and our District Defend secure mobility technology. And in each one of those we have a distinct business plan. They are different by nature and so they each monetize differently. But what they have in common is that they are all not directly labor based, and so they create value. First of all, they create higher margins and they create value outside of having to add headcount. And we're seeing good progress frankly in all four. It’s probably more than the time that we have to take you through the details on each one of them. But I am both pleased and optimistic they're all hitting their milestones. They're all on plan at this point, the revenues, the profits are not material to the overall operation. We didn't expect them to be at this point, but they're very much on track. And my hope is the future is very bright.

And my other question, there seems to be a drift higher in cost plus revenue and a drift down with fixed price revenue. Presumably that's having some impact on your margins and do you see that trend continuing and acting as a headwind going forward?

We see the uptick in cost reimbursable largely due to the growth in our defense business where more times than not that's the contract site that's applied. That being said, Ed, within our performance, both cost reimbursable and time, materials, we have been able to execute in a manner that has maintained if not grown margin a little bit. The downtick in fixed price is really from our vantage point a timing and clients’ preference. And we don't get too excited if there's a couple of percentage point decrement or increase in that. However, we continue to scale up our higher margin capabilities as we always have said. We're operating even more effectively year-over-year. And we're not experiencing as many self-inflicted missteps as we have in the past. And so for ‘20, it was really the COVID related impact that brought it down a bit.

If you’ll allow me, let me put this in the context of the overall investment thesis because I think it's important to just frame the all together. If you remember, we -- over the theory of the three year period that would end at the end of this year, if we actually meet our guidance for the year, we'll have added roughly $2 billion in new revenue, almost all of it organic. Our margins will have gone from, Lloyd, check me here, the low 9s, 10% or the low 10s. And then we would be looking at an ADEPS growth over a three year period in the 70% to 80%. So we've been able to do all of that while continuing to invest for the future, while continuing to drive the business, while continue to drive our margins. And the inside of that, like Lloyd pointed out, what's happening to the different piece parts of the business and even to the contract structure has in no way in an impediment. In fact, we're actually extraordinarily pleased with the performance of the contracts.

Thank you. Our next question comes from Matt Akers with Barclays. Your line is open.

Good morning, guys. Thanks for the question. I wonder if you could talk a little bit more about kind of the timing of when people can return to some of these secured facilities that they may not be able to access now. Has that started to happen at all, with some of these states kind of easing lockdowns or how should we think of sort of the timing of that?

So let me try and frame it. First of all, on some of our critical facilities, our people continue to go. They were on the frontlines. The work that we're doing could not be stopped and could not be brought into telework. And they've done an amazing job of continuing to be there, support our clients. I couldn't be prouder of them, and frankly, of our clients, because our clients have acted with a great deal of responsibility, discipline and diligence. And as a result of that, we've been able to have people at these critical facilities while keeping everybody safe. As we look forward, we anticipate and are beginning to see more requirements for people to go in. It's not a huge amount yet and it may not be. Our goal is to maximize telework because we know telework works for the vast majority of what we do. And we expect it to continue. Every time we send people back to a client facility because the mission requires it, we do it in consultation with the clients and in while building one of these safe return plans that addresses all of the things we talked about before to make sure that our people and our clients are safe as possible, while we do this.I think it’s people-centric approach that we've taken, that our clients have taken is really the right way to go and it will meet the need to bring people back in a way that is responsible for the needs of the mission and the safety of the people. And I think, again, as I said before, executing against this plan is our top priority.

Got it. Thanks. And then I guess, just a follow-up. So you had talked about, maybe at some point in the next year issuing like kind of the next stage of long-term guidance. Obviously a lot of uncertainty with COVID and the election and potentially budget pressures, as you called out in prepared remarks. I mean should we still think about that as sort of coming up in the near term future? Or when do you think of sort of framing that for us?

Sure, I'll start. I know Lloyd has a lot to say on this topic, too. This is an area that's near and dear to our hearts. I think having clear strategic guidance both internally and externally is important and we have been working on a strategic review that is ongoing. At the right time, probably, certainly in the next 12 months, we will look forward to trying to give both strategic -- clarify our internal strategic changes, if any, and give strategic guidance externally and the associated financials that go with that. I think, again, it's done against the backdrop of an investment thesis for the last three years and we still have to deliver on the last year and we're obviously very focused on that, has been very successful. And we have to stay adaptive and we have to be able to incorporate, as we always do, everything that we learn in the environment as part of our plans and as part of our strategy.

And not much more to build upon. I was looking forward to getting out with our new or updated investment thesis in the fall, at the latest, end of the calendar, then the pandemic hit. So we had to obviously do a bit of a reset there. But as Horacio said, we hope to be in a position shortly after the New Year, post the election to get back to everyone with what the update would be.

Thank you. Our next question comes from Robert Spingarn with Credit Suisse. Your line is open.

Well, good morning. Lloyd, I wanted to start with you on the cash flows. So, with the 550 delivered in fiscal '20, your guide is for flat two plus 50. I thought I’d just ask about the puts and takes around that spread?

Sure. Well, first of all we're very pleased with our consistent ability to collect cash and largely, as you listen to these calls, this has been a journey. We put in place a variety of operational changes, improved our relationship with the payment offices, as well as balance that out on the payable side. The increase in our guidance, we're very pleased and happy to do that. The puts and takes really are around the unknowns that you heard in our prepared remarks as to what as the pandemic unfolds might be the impact on the virtual processes that are working now. And in the first half, to the best of our ability we’ve got more clarity in the second half. So the cyclicality we don’t expect to change. We remain confident that we've got sustainable changes in place. But as we've done in the past, if we see that we are doing better, we'll advise everyone to that and make adjustments accordingly.

Okay. And then Horacio, just a couple of quick things. First on the telework. You've talked about how effective it's been for you. And we've all seen that. What do you think about the customer? Do you think that there's an opportunity one for the customer, DoD specifically, to increase telework as this -- post crisis? And is there an opportunity for you in there?And then the other question I wanted to ask you was on your book-to-bill. Here in the first half, do you see a similar trend as the last couple of years something like a -- let's call it a 2.0 book-to-bill for the first fiscal half?

Let me take the first part. I think Lloyd will want to thank the second part. We wouldn't have been able to move to this level of telework if it weren't for the fact that our clients have both encouraged and allowed it and worked right alongside with us. And I think we're all learning. We have for example learned to write these very large proposals entirely virtually. This is not something six months ago, we could have told you we could do.And I think our clients are learning too about both some of the opportunities and the limitations of these new platforms. And I think this whole thing is changing people's minds. I see in that an opportunity to do more remote delivery, which would be both more efficient and more effective to our clients. It would require people to move less often. It would have -- make different talent accessible to our clients. And our clients see that too. And so, I look forward to working with them to try and enable as much of that as humanly possible.On the book to bill front, I know Lloyd want to talk about the numbers. So all I can say is demand for what we do fortunately continues to be very robust, and we see a lot of opportunities and we're writing proposals at an accelerated pace and again in the context of what's going on around us we -- I am very optimistic and pleased with the performance so far.

That’s really correct. Let me point you to a couple of indications or indicators that give us the optimism. One is that our qualified pipeline is up 31% year-over-year. We're seeing recompetes up 17% and the new work opportunities indicative of the JAIC win have also increased the about $1.6 billion. Now ‘20 was a lighter year in terms of recompetes but we're expecting an uptick in that in FY ‘21. I think it's a bit premature to talk about specific numbers, but it's safe to say that we expect the seasonal pattern of book-to-bill to be largely on the same curve.

Thank you. Our next question comes from Seth Seifman with JP Morgan. Your line is open.

Just wondering about the budget remarks that you made early in the call. When we think about what the risks are and the puts and takes there in the second half of year, is it really about whether there's a fiscal ‘21 budget passed on time? Or are there other specific things that you think would affect your fiscal ‘21?

I think at this point we mostly want to acknowledge the potential volatility in the budget discussions. We're under a two year budget deal but the reality is that there's been an unprecedented number of things that are happening as we speak in the response to COVID and we aren't sure how that all is going to -- how it’s going to go. Having said that, I go back to the point that we feel very good about the demand signals that we're getting from our clients for the things that we do, that we have been as mission-centric as we know how to be because we believe that is a more resilient part of the market. And I think if we demonstrate it even with this early approach, this crisis, we can respond very quickly to changes in market signal and marketing environment. And so, that's how we see the second half of our year playing out.

I would just add that across all of our metrics we're expecting to deliver a very strong FY ‘21 coupled with a strong balance sheet that we see as a strategic asset. The budget is just one of several variables that are influencing our guidance. On the supply side, of the pandemic impact in terms of our people, future use or not use of PTO, shift work arrangements and collaboration with our clients. All of that are also variables that influence our guidance.

And one quick follow-up. I know this can be difficult at times given the high percentage of classified work, but you’ve mentioned going after additional large opportunities. You've also mentioned more recompete this year. On either side, is there anything specific that you can call out in terms of opportunities so we should be watching for?

Not at this time. I just pointed to on a recompete basis, win rate increased 7% to 90, which is getting back to our historical performance. And on the new business side, we've got a win rate of 61%. So that coupled with our differentiation, our client relationships, and our workforce, we are poised to have another solid year.

Thank you. And that concludes the question-and-answer session. I would like to turn the call back over Horacio Rozanski for closing remarks.

Thank you. And thank you all for your questions and for a very robust discussion this morning. If you'll allow me I'd like to close today once again saying thank you to the people of Booz Allen, to our clients and to our investors and analysts. It's because of all of you that Booz Allen can continue to strive for excellence. And we can lean forward as an institution that can do the right thing both for the short-term, and especially for the long-term. So thanks again, and have a great day.

Ladies and gentlemen this concludes today’s conference call. Thanks for participating. You may now disconnect.