After cutting its workforce by more than 500 employees in January, McLean-based Booz Allen Hamilton is holding back on new hires, according to company officials.
Booz Allen has previously estimated that the restructuring will save about $80 million; in the past quarter, the company said it accounted for $4.5 million of a $15.6 million charge it is taking in connection with the job cuts.
The caution on hiring comes as Booz Allen posted solid earnings for the first three months of the year. The company said last week its profit for the quarter ended March 31 surged to $50.6 million (36 cents a share), up from $18.1 million (13 cents) in the same period a year earlier. Revenue grew about 3.2 percent to $1.54 billion.
The workforce reductions and related cost savings “have provided us with operational flexibility and funds to invest in growth areas for the future,” said Ralph W. Shrader, Booz Allen’s chief executive, president and chairman, in a conference call with investors.
Still, the company is not moving quickly to hire new staff, said Samuel R. Strickland, the company’s chief financial officer.
Typically, he said, summer has meant a hiring boost so that the company could support putting out bid proposals while also preparing for anticipated new work.
“This year, we’ll clearly take a more conservative approach until we see what’s going to shake out around all of the ... political turmoil that we’re looking at,” Strickland said during the call with investors.
Shrader said he was confident the company could staff up quickly if work picks up. “In a really good month, we can hire 800 to 900 people. We’ve done it in the past,” he said. “We are playing the numbers very conservatively on the capacity side, staying very, very close to the demand curve. And as the awards come, we are not finding difficulty staffing them.”
William Loomis, managing director at Stifel Nicolaus, which has a business relationship with Booz Allen, said the contractor’s approach makes sense, given the business environment.
“That’s what you have to do,” he said. “In the industry, everybody’s going to be much more cautious on adding cost, including people.”
Company officials also addressed Booz Allen’s growing international and commercial businesses, which it began to more aggressively pursue following the end of a noncompete agreement with Booz & Co. last year. In 2008, Booz Allen separated its government and commercial businesses; its commercial business became New York-based Booz & Co. and a three-year noncompete agreement was part of the deal.
“We’re expanding our office in Abu Dhabi, and have recently obtained our license to operate in Qatar, Kuwait and Oman,” Shrader said last week.