LDOS
Leidos Holdings, INC
NYSE
8-K: Leidos Issues $1 Billion in Senior Notes to Refinance Debt and Fund Corporate Activities
Sentiment:
Debt Issuance
20 February 2025 4:15 PM
Leidos, Inc. has successfully issued $1 billion in senior notes, divided into $500 million of 5.400% notes due 2032 and $500 million of 5.500% notes due 2035, to refinance existing debt and support general corporate purposes.
Capital raise
Leidos, Inc. issued $500 million aggregate principal amount of 5.400% senior notes due 2032 and $500 million aggregate principal amount of 5.500% senior notes due 2035.
The Notes Offering was made pursuant to the Issuers automatic shelf registration statement on Form S-3 (File No. 333-269820).
The Issuer intends to use the net proceeds from the Notes Offering for general corporate purposes, including to: (i) repurchase for cash (the Tender Offer ) any and all of its outstanding 3.625% notes due 2025 (the 2025 Notes ) tendered in the Tender Offer; (ii) repay any 2025 Notes, in accordance with the satisfaction and discharge terms of an indenture, dated as of May 12, 2020, among the Issuer, Leidos, as guarantor, and the Trustee (the May 2020 Indenture ), that remain outstanding following the Tender Offer; (iii) repay a portion of the outstanding balance on its senior unsecured term loan facility; (iv) repurchase outstanding shares of its common stock; (v) fund potential acquisitions; and (vi) pay related fees and expenses.
Summary
- Leidos, Inc. issued $1 billion in senior notes on February 20, 2025.
- The issuance includes $500 million of 5.400% notes due in 2032 and $500 million of 5.500% notes due in 2035.
- The notes are guaranteed by Leidos Holdings, Inc.
- Interest payments will be made semi-annually on March 15 and September 15, starting September 15, 2025.
- The net proceeds from the offering will be used for general corporate purposes, including debt refinancing, stock repurchases, potential acquisitions, and related fees.
- Prior to January 15, 2032 for the 2032 Notes and December 15, 2034 for the 2035 Notes, Leidos can redeem the notes at a make-whole premium plus accrued interest.
- After these dates, the notes can be redeemed at 100% of the principal amount plus accrued interest.
- A change of control triggering event would require Leidos to offer to repurchase the notes at 101% of the principal amount plus accrued interest.
Sentiment
Score: 7
Explanation: The sentiment is neutral to positive. The issuance of debt is a common financial maneuver, and the stated uses of the funds are generally positive for the company's growth and financial health. However, the increased debt load introduces some risk.
Positives
- The issuance allows Leidos to refinance existing debt, potentially lowering interest expenses or extending maturities.
- The funds can be used for general corporate purposes, providing flexibility for strategic initiatives like acquisitions and stock repurchases.
- The notes are guaranteed by Leidos Holdings, Inc., providing additional security for investors.
- The offering provides Leidos with additional capital to pursue growth opportunities.
Negatives
- The issuance of new debt increases Leidos' overall debt burden.
- The company is obligated to make semi-annual interest payments, which could strain cash flow.
- A change of control event could trigger a costly repurchase offer.
Risks
- A change of control triggering event could require the Issuer to repurchase the notes at 101% of their principal amount plus accrued and unpaid interest.
- Failure to comply with covenants in the Indenture could lead to an event of default and acceleration of the notes.
- Market conditions could impact Leidos' ability to redeem the notes at favorable terms in the future.
- The company's credit rating could be negatively impacted by the increased debt load.
Future Outlook
Leidos intends to use the net proceeds from the Notes Offering for general corporate purposes, including to repurchase for cash any and all of its outstanding 3.625% notes due 2025 tendered in the Tender Offer; repay any 2025 Notes that remain outstanding following the Tender Offer; repay a portion of the outstanding balance on its senior unsecured term loan facility; repurchase outstanding shares of its common stock; fund potential acquisitions; and pay related fees and expenses.
Industry Context
In the current market environment, many companies are taking advantage of relatively low interest rates to refinance existing debt and secure funding for future growth. Leidos' issuance is consistent with this trend, allowing the company to optimize its capital structure and pursue strategic initiatives.
Comparison to Industry Standards
- Comparable companies in the defense and technology sectors, such as Lockheed Martin and General Dynamics, have also recently issued debt to manage their capital structures.
- The interest rates on Leidos' notes are in line with current market rates for companies with similar credit ratings.
- The use of proceeds for refinancing and acquisitions is a common practice among companies in this industry.
Stakeholder Impact
- Shareholders may benefit from the company's strategic use of the funds, potentially leading to increased profitability and stock value.
- Employees may benefit from the company's growth and stability.
- Creditors are exposed to increased risk due to the higher debt load.
- Customers and suppliers are unlikely to be directly impacted by this transaction.
Next Steps
- Leidos will use the proceeds from the note issuance for the stated corporate purposes.
- The company will make semi-annual interest payments on the notes.
- Leidos may redeem the notes prior to maturity under the specified conditions.
- The underwriters will offer the notes for sale to the public.
Key Dates
- October 8, 2020: Date of the Indenture between Leidos, Leidos Holdings, and Citibank, N.A.
- May 12, 2020: Date of the indenture among the Issuer, Leidos, as guarantor, and the Trustee (the May 2020 Indenture )
- February 13, 2025: Date of the Underwriting Agreement.
- February 20, 2025: Date of the Officers Certificate and issuance of the notes.
- September 15, 2025: Commencement of semi-annual interest payments.
- January 15, 2032: Par Call Date for the 2032 Notes.
- March 15, 2032: Maturity Date for the 2032 Notes.
- December 15, 2034: Par Call Date for the 2035 Notes.
- March 15, 2035: Maturity Date for the 2035 Notes.
Keywords
LDOS
Leidos Holdings, INC
NYSE
Sector: TBD
Filings with Classifications
Better than expected
6 May 2025 11:55 AM
Quarterly Report
- Revenue increased by 6.8% year-over-year.
- Operating income increased by 27.7% year-over-year.
- Diluted EPS increased from $2.07 to $2.77.
Better than expected
5 May 2025 10:44 PM
Earnings Release
- The company's revenue, net income, and adjusted EBITDA all exceeded expectations, demonstrating strong growth and profitability.
- The company's non-GAAP diluted EPS grew by 30% to $2.97, exceeding expectations.
- The company reaffirmed its full-year revenue guidance of $16.90 $17.30 billion, exceeding expectations.
Better than expected
17 March 2025 5:01 PM
Proxy Statement
- The company achieved record revenues and exceeded its three-year financial goals.
- Adjusted EBITDA margin increased significantly.
- The company's backlog grew substantially.
Capital raise
25 February 2025 4:23 PM
Debt Management Announcement
- Leidos issued $500 million aggregate principal amount of 5.400% senior notes due 2032.
- Leidos issued $500 million aggregate principal amount of 5.500% senior notes due 2035.
- The proceeds from these issuances were used to fund the repurchase and discharge of the 2025 Notes.
Capital raise
20 February 2025 4:15 PM
Debt Issuance
- Leidos, Inc. issued $500 million aggregate principal amount of 5.400% senior notes due 2032 and $500 million aggregate principal amount of 5.500% senior notes due 2035.
- The Notes Offering was made pursuant to the Issuers automatic shelf registration statement on Form S-3 (File No. 333-269820).
- The Issuer intends to use the net proceeds from the Notes Offering for general corporate purposes, including to: (i) repurchase for cash (the Tender Offer ) any and all of its outstanding 3.625% notes due 2025 (the 2025 Notes ) tendered in the Tender Offer; (ii) repay any 2025 Notes, in accordance with the satisfaction and discharge terms of an indenture, dated as of May 12, 2020, among the Issuer, Leidos, as guarantor, and the Trustee (the May 2020 Indenture ), that remain outstanding following the Tender Offer; (iii) repay a portion of the outstanding balance on its senior unsecured term loan facility; (iv) repurchase outstanding shares of its common stock; (v) fund potential acquisitions; and (vi) pay related fees and expenses.
Capital raise
13 February 2025 8:50 AM
Tender Offer Announcement
- Leidos intends to fund the tender offer and the repayment of any remaining notes through an offering of new senior notes.
- The completion of the tender offer is contingent upon the successful completion of this new offering.
Better than expected
11 February 2025 1:19 PM
Annual Results
- The company's operating income significantly increased due to lower impairment charges and a net increase in volumes on certain programs.
- Net income attributable to Leidos common stockholders was substantially higher compared to the previous fiscal year.
Delay expected
11 February 2025 1:19 PM
Annual Results
- The Commercial & International segment experienced write-downs on certain programs within our UK operations for which cost and schedule were rebaselined.
Better than expected
10 February 2025 8:29 PM
Earnings Release
- The company's revenue, EPS, and backlog all exceeded expectations, indicating strong performance across key financial metrics.
Better than expected
29 October 2024 10:42 AM
Quarterly Report
- The company's net income and revenue significantly improved compared to the same period last year, indicating better than expected results.
- The Health & Civil segment's performance was particularly strong, exceeding expectations.
Delay expected
29 October 2024 10:42 AM
Quarterly Report
- The document mentions delays in airline travel infrastructure projects impacting the Security Enterprise Solutions (SES) reporting unit.
Better than expected
28 October 2024 7:23 PM
Quarterly Report
- The company's net income and adjusted EBITDA significantly exceeded expectations, driven by improved operating performance and increased demand.
- The company raised its full-year guidance for revenue, adjusted EBITDA margin, and non-GAAP diluted EPS, indicating a positive outlook.
- The company's non-GAAP diluted EPS of $2.93 was a 44% increase year-over-year, significantly exceeding expectations.
Better than expected
30 July 2024 11:45 AM
Quarterly Report
- The company's revenue, operating income, and net income all significantly exceeded the prior year's results, indicating better than expected performance.
- The Health & Civil segment's exceptional growth and profitability drove the overall positive results, surpassing expectations.
- The company's diluted EPS of $2.37 for the quarter and $4.42 for the six months were substantially higher than the prior year, indicating better than expected profitability.
Delay expected
30 July 2024 11:45 AM
Quarterly Report
- The company experienced write-downs on programs within its UK operations due to cost increases and schedule delays.
Better than expected
29 July 2024 5:55 PM
Quarterly Report
- The company's revenue, net income, adjusted EBITDA, and non-GAAP diluted EPS all exceeded prior year results and expectations.
- The company increased its full-year guidance for adjusted EBITDA margin and non-GAAP diluted EPS.
Better than expected
30 April 2024 11:02 AM
Quarterly Report
- The company's net income, revenue, and operating income all significantly exceeded the prior year's results.
- The Health & Civil segment's performance was particularly strong, driving overall growth.
- The company's earnings per share also showed a substantial increase.
Better than expected
30 April 2024 6:05 AM
Quarterly Report
- Leidos exceeded expectations with a 7% increase in revenue, a 73% increase in net income, and a 42% increase in adjusted EBITDA.
- The company raised its full-year guidance for revenue, adjusted EBITDA margin, non-GAAP diluted EPS, and operating cash flow, indicating better-than-expected performance and outlook.
Better than expected
13 February 2024 6:08 AM
Quarterly Report
- Leidos exceeded its own financial guidance for the fourth quarter and fiscal year 2023, indicating better than expected results.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.