LDOS
Leidos Holdings, INC
NYSE
10-Q: Leidos Holdings Reports Strong First Quarter 2024 Results Driven by Health and Civil Sector Growth
Sentiment:
Quarterly Report
30 April 2024 11:02 AM
Leidos Holdings, Inc. reported a significant increase in net income and revenue for the first quarter of 2024, driven by strong performance in the Health & Civil sector and overall business growth.
Better than expected
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.
Summary
- Leidos Holdings, Inc. reported a net income of $283 million for the quarter ended March 29, 2024, a substantial increase from $164 million in the same period last year.
- The company's revenue reached $3.975 billion, up from $3.699 billion in the first quarter of 2023.
- Operating income also saw a significant rise, reaching $415 million compared to $265 million in the prior year.
- The Health & Civil segment showed the most significant growth, with a 18.9% increase in revenue and a 96.5% increase in operating income.
- Leidos recorded net bookings of $3.7 billion during the quarter, compared to $3.0 billion in the same period last year.
- The company's total backlog stands at $36.571 billion as of March 29, 2024.
- Approximately 62% of the remaining performance obligations are expected to be recognized over the next 12 months and 78% over the next 24 months.
Sentiment
Score: 8
Explanation: The document presents a very positive outlook with strong financial results, significant growth in key segments, and a healthy backlog. While there are some minor negatives and risks, the overall tone is optimistic and indicates a strong performance by the company.
Positives
- The company experienced a significant increase in net income and revenue.
- The Health & Civil segment demonstrated exceptional growth in both revenue and operating income.
- Leidos secured strong bookings during the quarter, indicating future revenue potential.
- The company's backlog increased, providing a solid foundation for future performance.
- Leidos successfully managed its cash flow, with a $161 million increase in net cash provided by operating activities compared to the prior year quarter.
- The company repurchased a significant amount of its own stock, indicating confidence in its future prospects.
Negatives
- The Defense Systems segment experienced a slight decrease in operating income.
- Corporate operating loss increased due to higher general and administrative expenses.
- The effective tax rate increased to 23.1% from 20.8% in the prior year due to an increase in unrecognized tax benefits and a reduced benefit in federal research tax credits.
- The company's cash and cash equivalents decreased from $777 million to $633 million.
Risks
- The company's reliance on U.S. government contracts exposes it to changes in government spending and budget priorities.
- International operations expose the company to regulatory and geopolitical risks.
- Ongoing government investigations and reviews could lead to potential penalties and reputational damage.
- The company is subject to ongoing audits by the Defense Contract Audit Agency, which could result in adjustments to contract revenues.
- Changes in international trade policies, including higher tariffs, may increase procurement costs.
Future Outlook
The company anticipates being able to meet its liquidity needs for the next 12 months through cash generated from operations, available cash balances, borrowings from its commercial paper program, and if needed, sales of accounts receivable and borrowings from its revolving credit facility.
Management Comments
- Management believes they have adequately reserved for potential adjustments from audits or reviews of contract costs.
- Management does not believe that outstanding performance guarantees and cross-indemnity agreements will have a material effect on the company's liquidity, capital expenditures, or financial condition.
Industry Context
Leidos operates in the government contracting industry, which is heavily influenced by government spending and budget priorities. The company's performance is tied to the demand for its services in national security, health, and technology sectors. The recent passage of appropriations packages and the release of the President's budget indicate continued government spending in these areas, which could benefit Leidos.
Comparison to Industry Standards
- Leidos's revenue growth of 7.5% year-over-year is a strong result compared to other large government contractors such as General Dynamics (GD) and Lockheed Martin (LMT), which have seen more modest growth in recent quarters.
- The significant increase in operating income, particularly in the Health & Civil segment, suggests that Leidos is effectively managing costs and capitalizing on market opportunities, outperforming some of its peers in terms of profitability.
- The company's backlog of $36.571 billion is a positive indicator of future revenue, and is comparable to other large government contractors with similar long-term contracts.
- Leidos's focus on technology-enabled services and digital modernization aligns with industry trends, positioning it well for future growth compared to companies with less focus on these areas.
Stakeholder Impact
- Shareholders will benefit from the increased profitability and share repurchases.
- Employees may benefit from the company's growth and success.
- Customers will continue to receive services and solutions from the company.
- Suppliers and creditors will continue to engage with the company as a reliable partner.
Next Steps
- The company will continue to evaluate the potential impact of the Pillar Two legislation.
- The company will continue to cooperate with ongoing government investigations and reviews.
- The company will continue to monitor and manage its financial covenants and debt obligations.
Legal Proceedings
- The company is involved in various claims and lawsuits arising in the normal conduct of business, none of which are expected to have a material adverse effect.
- The company is conducting an internal investigation related to international operations and has self-reported to the Department of Justice and the Securities and Exchange Commission.
- The company received a Federal Grand Jury Subpoena related to a criminal investigation by the U.S. Attorneys Office for the Southern District of California.
- The company received a Federal Grand Jury Subpoena in connection with a criminal investigation being conducted by the U.S. Department of Justice Antitrust Division.
Key Dates
- March 10, 2023: Leidos entered into a Credit Agreement providing for a $1.0 billion term loan facility and a $1.0 billion revolving credit facility.
- February 28, 2023: Leidos issued and sold $750 million aggregate principal amount of fixed-rate senior notes maturing in March 2033.
- March 29, 2024: End of the reporting period for the first quarter of fiscal year 2024.
- April 23, 2024: The number of shares issued and outstanding of each of the issuers classes of common stock was 135,211,535 shares.
- April 30, 2024: Date of filing of the quarterly report on Form 10-Q.
Keywords
Leidos, Government Contracts, Defense, Health, Technology, National Security, Digital Modernization, Cybersecurity, Revenue, Net Income, Backlog, Operating Income
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.