LDOS
Leidos Holdings, INC
NYSE
8-K: Leidos Reports Strong Q3 2024 Results, Raises Full-Year Guidance
Sentiment:
Quarterly Report
28 October 2024 7:23 PM
Leidos announced strong third-quarter results for 2024, with a 7% year-over-year revenue increase and raised its full-year guidance.
Better than expected
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.
Summary
- Leidos reported a 7% increase in revenue year-over-year, reaching $4.19 billion for the third quarter of 2024.
- Net income for the quarter was $362 million, or $2.68 per diluted share, a significant improvement compared to a net loss in the same quarter last year.
- Adjusted EBITDA reached $596 million, with a record margin of 14.2%, up from 11.5% in the third quarter of 2023.
- Non-GAAP diluted earnings per share were $2.93, a 44% increase year-over-year.
- The company generated $656 million in cash flow from operations and $633 million in free cash flow.
- Net bookings for the quarter totaled $8.1 billion, resulting in a book-to-bill ratio of 1.9.
- Leidos is updating its fiscal year 2024 revenue guidance to $16.35 $16.45 billion, adjusted EBITDA margin to high-12%, and non-GAAP diluted EPS to $9.80 $10.00.
- The company's backlog at the end of the quarter was $40.6 billion, with $9.1 billion funded.
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 significantly exceeded expectations, indicating a strong outlook.
Positives
- Leidos experienced strong revenue growth across all customer segments, particularly in managed health services.
- The company achieved record margins for net income and adjusted EBITDA.
- There was substantial growth in earnings and strong cash flow generation.
- Leidos had robust bookings, indicating strong future revenue potential.
- The company increased its quarterly dividend by 5.3% to $0.40 per share.
- The company is well-positioned to deliver robust and sustainable returns due to a healthy balance sheet and improving business development performance.
- The company has a strong backlog of $40.6 billion.
Negatives
- Comparisons to the prior year are skewed due to a $699 million pre-tax, non-cash impairment and restructuring charge in Q3 2023.
- The company has $4.7 billion of debt as of September 27, 2024.
Risks
- The company is subject to risks related to U.S. government defense and non-defense budgets, including potential budget reductions and delays.
- There are uncertainties in tax due to new tax legislation or other regulatory developments.
- The company faces risks related to delays in the U.S. government contract procurement process.
- Leidos is exposed to cybersecurity, data security, and other security threats.
- The company's ability to accurately estimate costs on fixed-price contracts is a risk.
- The company is subject to risks related to its international business and compliance with anti-corruption laws.
- The company's ability to grow its commercial health and infrastructure businesses could be negatively affected by budgetary constraints.
Future Outlook
Leidos is updating its fiscal year 2024 guidance, projecting revenues of $16.35 $16.45 billion, an adjusted EBITDA margin of high-12%, and non-GAAP diluted EPS of $9.80 $10.00. The company also expects approximately $1.35 billion in cash flows from operating activities.
Management Comments
- Continued improvement in operating performance across all segments drove excellent revenue growth, record margins for net income and adjusted EBITDA, substantial earnings growth, strong cash flow, and robust bookings, said Leidos Chief Executive Officer Tom Bell.
- These results demonstrate clearly how our collaborative and innovative workforce is focused on consistent execution for our customers and shareholders.
- With a healthy balance sheet, improving business development performance, and emerging 'North Star' strategy, Leidos is well positioned to deliver robust and sustainable returns as we move forward.
Industry Context
Leidos' strong performance reflects a positive trend in the government contracting sector, particularly in areas like managed health services and defense technology. The company's focus on innovation and collaboration aligns with the industry's increasing demand for advanced technology solutions.
Comparison to Industry Standards
- Leidos' 7% revenue growth is solid compared to peers in the government contracting space, such as General Dynamics (GD) and Lockheed Martin (LMT), which have seen varying growth rates in recent quarters.
- The adjusted EBITDA margin of 14.2% is competitive, potentially exceeding the average margins of some of its peers, such as Booz Allen Hamilton (BAH), which often operate in the 10-12% range.
- The book-to-bill ratio of 1.9 indicates strong demand for Leidos' services, which is a positive sign compared to companies with lower ratios, such as CACI International (CACI).
- The company's free cash flow generation of $633 million is a strong indicator of financial health, comparable to other large government contractors with similar cash flow profiles.
- The increase in dividend by 5.3% is a positive sign for investors, and is in line with other mature companies in the sector.
Stakeholder Impact
- Shareholders will benefit from increased earnings, a higher dividend, and a positive outlook.
- Employees will benefit from the company's strong performance and focus on innovation.
- Customers will benefit from Leidos' commitment to consistent execution and delivery of high-quality solutions.
- Suppliers and creditors will benefit from the company's strong financial position and cash flow generation.
Next Steps
- Leidos will continue to execute its 'North Star' strategy.
- The company will focus on delivering robust and sustainable returns.
- Leidos will continue to monitor and respond to developments in government budgets and procurement processes.
Key Dates
- October 25, 2024: Leidos Board of Directors declared a cash dividend of $0.40 per share.
- October 29, 2024: Leidos issued a press release announcing its financial results for the third fiscal quarter ended September 27, 2024, and held an earnings conference call.
- December 16, 2024: Record date for the declared cash dividend.
- December 31, 2024: Payment date for the declared cash dividend.
- October 29, 2025: Archived version of the webcast will be available on the Leidos Investor Relations website until this date.
Keywords
Leidos, Financial Results, Third Quarter, Revenue, EBITDA, Earnings Per Share, Bookings, Guidance, 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.
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.
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