LDOS
Leidos Holdings, INC
NYSE
8-K: Leidos Holdings Reports Strong Second Quarter Results, Driven by Growth in Health Services
Sentiment:
Quarterly Report
29 July 2024 5:55 PM
Leidos Holdings, Inc. announced an 8% year-over-year revenue increase to $4.1 billion and a 54% increase in net income to $324 million for the second quarter of fiscal year 2024.
Better than expected
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.
Summary
- Leidos reported revenues of $4.1 billion for the second quarter of fiscal year 2024, an 8% increase compared to the same period last year.
- Net income for the quarter was $324 million, or $2.37 per diluted share, representing a 54% increase year-over-year.
- Adjusted EBITDA reached $559 million, a 33% increase year-over-year, with a record margin of 13.5%.
- Non-GAAP diluted earnings per share were $2.63, up 46% year-over-year.
- The company generated $374 million in cash from operations and $351 million in free cash flow.
- Net bookings for the quarter totaled $4.0 billion, resulting in a book-to-bill ratio of 1.0.
- Leidos' backlog stands at $36.5 billion, with $8.0 billion funded.
- The company returned $165 million to shareholders through share repurchases and dividends.
- Leidos is updating its fiscal year 2024 revenue guidance to $16.1 $16.4 billion, with an adjusted EBITDA margin of approximately 12% and non-GAAP diluted EPS of $8.60 $9.00.
Sentiment
Score: 9
Explanation: The document conveys a very positive sentiment due to strong financial results, increased guidance, and positive management commentary. The company's performance exceeded expectations, and there are no significant negative issues highlighted.
Positives
- Leidos experienced strong revenue growth across all customer segments, particularly in managed health services.
- The company's profitability improved significantly, driven by increased volumes, higher earned incentives, and improved cost control.
- Leidos demonstrated strong cash generation, with $374 million in operating cash flow and $351 million in free cash flow.
- The company's book-to-bill ratio of 1.0 indicates a healthy pipeline of future work.
- Leidos is increasing its full-year guidance for adjusted EBITDA margin and non-GAAP diluted EPS.
- The company's Days Sales Outstanding (DSO) improved by one day to 58 days.
Negatives
- The Commercial & International segment experienced a decrease in operating income margin due to contract adjustments in the UK business.
- The company has $4.7 billion of debt as of June 28, 2024.
Risks
- The company's performance is subject to developments in U.S. government defense and non-defense budgets, including potential budget reductions and delays.
- Uncertainties in tax due to new tax legislation or other regulatory developments could impact financial results.
- Rising inflationary pressures and fluctuations in interest rates may affect costs and profitability.
- Delays in the U.S. government contract procurement process or the award of contracts could impact revenue.
- The company faces risks related to cybersecurity, data security, and other security threats.
- The company's ability to attract, train, and retain skilled employees is crucial for its success.
- The company's ability to accurately estimate costs associated with firm-fixed-price contracts is important for profitability.
Future Outlook
Leidos is updating its fiscal year 2024 guidance, projecting revenues between $16.1 and $16.4 billion, an adjusted EBITDA margin of approximately 12%, and non-GAAP diluted EPS between $8.60 and $9.00. Cash flows provided by operating activities are expected to be approximately $1.3 billion.
Management Comments
- Thomas Bell, Leidos Chief Executive Officer, stated that Leidos continued its industry-leading profitable growth and strong cash generation in the second quarter.
- He also highlighted the company's progress towards key operational priorities and its dedication to the 'Promises Made, Promises Kept' philosophy.
- Bell noted that the company's collaborative innovation strategy and capabilities-based organization position it well to deliver on its commitments for the remainder of 2024 and beyond.
Industry Context
Leidos' strong performance reflects the continued demand for technology and services in the national security and health sectors. The company's focus on innovation and its ability to secure large government contracts positions it well within the competitive landscape. The growth in managed health services aligns with broader trends in healthcare outsourcing and digital transformation.
Comparison to Industry Standards
- Leidos' 8% revenue growth is strong compared to some of its peers in the government contracting sector, such as General Dynamics (GD) and Northrop Grumman (NOC), which have seen more modest growth in recent quarters.
- The 33% increase in adjusted EBITDA and 13.5% margin are particularly impressive, suggesting strong operational efficiency and cost management compared to companies like Booz Allen Hamilton (BAH) and CACI International (CACI).
- The book-to-bill ratio of 1.0 indicates a stable pipeline of future work, which is comparable to industry standards for companies with large government contracts.
- The company's focus on managed health services is a differentiator, as many competitors are more heavily focused on defense and national security contracts.
Stakeholder Impact
- Shareholders will benefit from the strong financial results, increased guidance, and return of capital through share repurchases and dividends.
- Employees may benefit from the company's growth and success.
- Customers will benefit from the company's continued focus on innovation and delivery of high-quality services.
- Suppliers and creditors will benefit from the company's strong financial position.
Next Steps
- Leidos management will discuss operations and financial results in an earnings conference call on July 30, 2024.
- The company will continue to execute on its business plan and long-term management initiatives.
- Leidos will focus on delivering on its commitments for the remainder of 2024 and beyond.
Key Dates
- June 28, 2024: End of the second fiscal quarter for which results are reported.
- June 30, 2023: End of the second fiscal quarter for the prior year, used for comparison.
- July 26, 2024: Date the Leidos Board of Directors declared a cash dividend.
- July 30, 2024: Date of the earnings release and conference call.
- September 13, 2024: Record date for the declared cash dividend.
- September 27, 2024: Payment date for the declared cash dividend.
- July 30, 2025: Date until which the archived version of the webcast will be available.
Keywords
Leidos, Financial Results, Second Quarter, Revenue Growth, EBITDA, Net Income, Bookings, Backlog, Defense, Health, Technology, Government Contracts
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.
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
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.
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.