Leidos Holdings, Inc. Reports Second Quarter Fiscal Year 2023 Results
- Record revenues of $3.8 billion, representing a 7% year-over-year increase.
- Net income of $210 million and adjusted EBITDA of $420 million, with margins of 5.5% and 10.9% respectively.
- Diluted earnings per share of $1.50, or $1.80 on a non-GAAP basis.
- Cash flows from operations of $164 million and free cash flow of $124 million, with net bookings of $2.9 billion.
- Backlog at the end of the quarter was $34.2 billion, of which $8.3 billion was funded.
- Updated FY23 guidance with revenues between $14.9 billion and $15.2 billion, adjusted EBITDA margin between 10.1% and 10.5%, and non-GAAP diluted EPS between $6.40 and $6.80.
- None.
- Revenues of
, up$3.8 billion 7% year-over-year - Net Income of
($210 million 5.5% margin); Adjusted EBITDA of ($420 million 10.9% margin) - Diluted Earnings per Share of
, or$1.50 on a non-GAAP basis$1.80 - Cash Flows from Operations of
; Free Cash Flow of$164 million $124 million - Net Bookings of
(book-to-bill ratio of 0.8)$2.9 billion
Thomas Bell, Leidos Chief Executive Officer, commented, "It is my honor to lead Leidos into its second decade of top-line growth, which we plan to complement with a sharper focus on earnings and cash through disciplined financial management. This focus is underscored by the strong second quarter results announced today, characterized by record revenues and adjusted EBITDA. Propelling our future performance, we will remain dedicated to resolving with pace the most challenging problems faced by our customers, our nation, and its allies—an approach that distinctly sets Leidos apart."
Summary Operating Results
Three Months Ended | ||||
(in millions, except margin and per share amounts) | June 30, 2023 | July 1, 2022 | ||
Revenues | $ 3,838 | $ 3,597 | ||
Net income | $ 210 | $ 172 | ||
Net income margin | 5.5 % | 4.8 % | ||
Diluted earnings per share (EPS) | $ 1.50 | $ 1.24 | ||
Non-GAAP Measures*: | ||||
Adjusted EBITDA | $ 420 | $ 366 | ||
Adjusted EBITDA margin | 10.9 % | 10.2 % | ||
Non-GAAP diluted EPS | $ 1.80 | $ 1.59 | ||
* Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information |
Revenues for the quarter were
Net income was
The primary drivers of increased earnings were improved business mix and program execution within each segment as well as reduced indirect spending across the company.
Cash Flow Summary
In the second quarter Leidos generated
Investing activities consisted primarily of
On July 28, 2023, the Leidos Board of Directors declared a cash dividend of
Business Development
Net bookings totaled
- Common Hypersonics Glide Body (CHGB) Follow-On. The
U.S. Army Program Executive Office Missiles and Space (PEO MS) awarded Leidos a four-year, prime contract to develop and test new CHGB prototypes. Under this follow-on, the Dynetics team expects to build up to 31 new CHGB prototypes to support Army and Navy requirements.$428 million - Centers for Medicare and Medicaid Services (CMS) Office of Information Technology End-User Centric IT Support. The CMS OIT awarded Leidos a contract with a total estimated value of
over five years to provide seat-management services for CMS OIT employees and contractors and their personal computers, mobile devices and productivity services enabled through those devices. Under the contract, Leidos will continue to deliver engineering, innovation and accessibility compliance support to an onsite and remote workforce with a focus on fostering a positive end-user experience.$197 million - Royal Saudi Air Force (RSAF) Contractor Engineering & Technical Services Follow-On (CETS V). The RSAF awarded Leidos a contract with a total estimated value of
over four years to maintain and enhance RSAF Command, Control, Communications, Computers and Intelligence (C4I) systems, including ground communications, radars, and IT systems, and support various aircraft platforms and systems support programs.$105 million - Defense Enclave Services (DES) DoDNet Planning and Design (DPAD). The Defense Information Systems Agency (DISA) awarded Leidos a DES task order with a total estimated value of
over 55 months to migrate 14 Defense Agencies and Field Activities (DAFAs) to DoDNet. This award is the second task order under the DES effort to consolidate enterprise IT services and provide standardized, responsive and cost-effective solutions for more than 370,000 users spanning 22 Department of Defense (DoD) agencies and field activities with over 500 sites both in the$69 million U.S. and abroad. The work will focus on mission value and user experience, while improving cybersecurity, network availability and reliability.
In addition, Leidos expanded its partnership network in support of technology offerings. As part of a Trusted Generative AI campaign, Leidos strengthened its collaboration with industry leaders, harnessing shared expertise to drive innovation in AI. These partnerships allow Leidos to work with the most advanced models available—from OpenAI's GPT-4 through Microsoft to Google's Bard and Amazon's Bedrock. This collaboration enables secure environments that protect sensitive data while leveraging the power of Generative AI. In addition, Leidos and Aalyria have partnered to integrate Aalyria's Spacetime networking technology with Leidos' global-scale network management and protection solutions for critical government missions. By integrating Spacetime into new and existing solutions, the companies are developing multi-domain mission infrastructure capabilities that are secure, resilient and capable of spanning air, land, sea and space.
Forward Guidance
Leidos is updating its fiscal year 2023 guidance as follows:
FY23 Guidance | ||||||||||||||||||
Measure | Current | Prior | ||||||||||||||||
Revenues (billions) | ||||||||||||||||||
Adjusted EBITDA Margin | ||||||||||||||||||
Non-GAAP Diluted EPS | ||||||||||||||||||
Cash Flows Provided by Operating Activities (millions) | at or above | at or above |
For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.
Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected net income and diluted EPS being materially less than what may be implied by projected adjusted EBITDA margins and non-GAAP diluted EPS.
Conference Call Information
Leidos management will discuss operations and financial results in an earnings conference call beginning at 8:00 A.M. eastern time on August 1, 2023. Analysts and institutional investors may participate by dialing +1 (877) 869-3847 (toll-free
A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (http://ir.leidos.com).
After the call concludes, an audio replay can be accessed on the Leidos Investor Relations website or by dialing +1 (877) 660-6853 (toll-free
About Leidos
Leidos is a Fortune 500® technology, engineering, and science solutions and services leader working to solve the world's toughest challenges in the defense, intelligence, civil and health markets. Leidos' 46,000 employees support vital missions for government and commercial customers. Headquartered in
For more information, visit www.leidos.com.
Forward-Looking Statements
Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance" and similar words or phrases. Forward-looking statements in this release include, among others, estimates of our future growth, strategy and financial and operating performance, including future revenues, adjusted EBITDA margins, diluted EPS (including on a non-GAAP basis) and cash flows provided by operating activities, as well as statements about our business contingency plans, government budgets and the ongoing Continuing Resolution, uncertainties in tax due to new tax legislation or other regulatory developments, strategy, planned investments, sustainability goals and our future dividends, share repurchases, capital expenditures, debt repayments, acquisitions, dispositions and cash flow conversion. These statements reflect our belief and assumptions as to future events that may not prove to be accurate.
Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking statements made in this release depending on a variety of factors, including, but not limited to: developments in the
These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the
All information in this release is as of August 1, 2023. Leidos expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in Leidos' expectations. Leidos also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.
CONTACTS: | ||
Investor Relations: | Media Relations: | |
Stuart Davis | Melissa Lee Dueñas | |
571.526.6124 | 571.526.6850 | |
LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | July 1, | June 30, | July 1, | |||||
Revenues | $ 3,838 | $ 3,597 | $ 7,537 | $ 7,091 | ||||
Cost of revenues | 3,271 | 3,059 | 6,475 | 6,041 | ||||
Selling, general and administrative expenses | 237 | 262 | 470 | 498 | ||||
Acquisition, integration and restructuring costs | 6 | 5 | 9 | 8 | ||||
Asset impairment charges | — | 3 | — | 3 | ||||
Equity earnings of non-consolidated subsidiaries | (7) | (3) | (13) | (1) | ||||
Operating income | 331 | 271 | 596 | 542 | ||||
Non-operating expense: | ||||||||
Interest expense, net | (56) | (50) | (110) | (98) | ||||
Other (expense) income, net | (1) | 4 | (5) | 3 | ||||
Income before income taxes | 274 | 225 | 481 | 447 | ||||
Income tax expense | (64) | (53) | (107) | (98) | ||||
Net income | 210 | 172 | 374 | 349 | ||||
Less: net income attributable to non-controlling interest | 3 | 1 | 5 | 3 | ||||
Net income attributable to Leidos common stockholders | $ 207 | $ 171 | $ 369 | $ 346 | ||||
Earnings per share: | ||||||||
Basic | $ 1.51 | $ 1.25 | $ 2.69 | $ 2.51 | ||||
Diluted | 1.50 | 1.24 | 2.67 | 2.49 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 137 | 137 | 137 | 138 | ||||
Diluted | 138 | 138 | 138 | 139 | ||||
Cash dividends declared per share | $ 0.36 | $ 0.36 | $ 0.72 | $ 0.72 |
LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except par value) | ||||
June 30, | December 30, | |||
(unaudited) | ||||
Assets: | ||||
Cash and cash equivalents | $ 329 | $ 516 | ||
Receivables, net | 2,478 | 2,350 | ||
Inventory, net | 310 | 287 | ||
Other current assets | 459 | 490 | ||
Total current assets | 3,576 | 3,643 | ||
Property, plant and equipment, net | 928 | 847 | ||
Intangible assets, net | 851 | 952 | ||
Goodwill | 6,701 | 6,696 | ||
Operating lease right-of-use assets, net | 534 | 545 | ||
Other long-term assets | 436 | 388 | ||
Total assets | $ 13,026 | $ 13,071 | ||
Liabilities: | ||||
Accounts payable and accrued liabilities | $ 1,970 | $ 2,254 | ||
Accrued payroll and employee benefits | 666 | 701 | ||
Short-term debt and current portion of long-term debt | 219 | 992 | ||
Total current liabilities | 2,855 | 3,947 | ||
Long-term debt, net of current portion | 4,670 | 3,928 | ||
Operating lease liabilities | 553 | 570 | ||
Deferred tax liabilities | 16 | 40 | ||
Other long-term liabilities | 279 | 233 | ||
Total liabilities | 8,373 | 8,718 | ||
Stockholders' equity: | ||||
Common stock, | — | — | ||
Additional paid-in capital | 2,024 | 2,005 | ||
Retained earnings | 2,636 | 2,367 | ||
Accumulated other comprehensive loss | (63) | (73) | ||
Total Leidos stockholders' equity | 4,597 | 4,299 | ||
Non-controlling interest | 56 | 54 | ||
Total stockholders' equity | 4,653 | 4,353 | ||
Total liabilities and stockholders' equity | $ 13,026 | $ 13,071 |
LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | July 1, | June 30, | July 1, | |||||
Cash flows from operations: | ||||||||
Net income | $ 210 | $ 172 | $ 374 | $ 349 | ||||
Adjustments to reconcile net income to net cash provided by operations: | ||||||||
Depreciation and amortization | 84 | 83 | 166 | 168 | ||||
Stock-based compensation | 19 | 19 | 37 | 35 | ||||
Deferred income taxes | (45) | (75) | (88) | (136) | ||||
Other | 1 | 3 | 6 | 7 | ||||
Change in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||
Receivables | 43 | (6) | (123) | (238) | ||||
Other current assets and other long-term assets | 58 | 101 | 49 | 73 | ||||
Accounts payable and accrued liabilities and other long-term liabilities | (101) | (206) | (198) | (266) | ||||
Accrued payroll and employee benefits | (45) | (23) | (32) | 101 | ||||
Income taxes receivable/payable | (60) | (23) | (125) | 45 | ||||
Net cash provided by operating activities | 164 | 45 | 66 | 138 | ||||
Cash flows from investing activities: | ||||||||
Acquisition of a business, net of cash acquired | (4) | — | (4) | (2) | ||||
Divestiture of a business | — | 6 | — | 15 | ||||
Payments for property, equipment and software | (40) | (21) | (79) | (49) | ||||
Net proceeds from sale of assets | — | 6 | — | 6 | ||||
Other | — | 1 | — | 1 | ||||
Net cash used in investing activities | (44) | (8) | (83) | (29) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from debt issuance | — | 380 | 1,743 | 380 | ||||
Net proceeds from commercial paper | 200 | 75 | 200 | 150 | ||||
Repayments of borrowings | (325) | (407) | (2,036) | (434) | ||||
Payments for debt issuance costs | — | — | (7) | — | ||||
Dividend payments | (50) | (49) | (100) | (100) | ||||
Repurchases of stock and other | — | (2) | (43) | (528) | ||||
Proceeds from issuances of stock | 13 | 10 | 25 | 22 | ||||
Net capital distributions to non-controlling interests | (2) | (1) | (3) | (3) | ||||
Net cash (used in) provided by financing activities | (164) | 6 | (221) | (513) | ||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 1 | (5) | 3 | (5) | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (43) | 38 | (235) | (409) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 491 | 428 | 683 | 875 | ||||
Cash, cash equivalents and restricted cash at end of period | 448 | 466 | 448 | 466 | ||||
Less: restricted cash at end of period | 119 | 127 | 119 | 127 | ||||
Cash and cash equivalents at end of period | $ 329 | $ 339 | $ 329 | $ 339 |
LEIDOS HOLDINGS, INC. UNAUDITED SEGMENT OPERATING RESULTS (in millions) | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | July 1, | June 30, | July 1, | |||||
Revenues: | ||||||||
Defense Solutions | $ 2,187 | $ 2,052 | $ 4,299 | $ 4,101 | ||||
Civil | 902 | 857 | 1,779 | 1,652 | ||||
Health | 749 | 688 | 1,459 | 1,338 | ||||
Total | $ 3,838 | $ 3,597 | $ 7,537 | $ 7,091 | ||||
Operating income (loss): | ||||||||
Defense Solutions | $ 175 | $ 139 | $ 322 | $ 272 | ||||
Civil | 64 | 38 | 104 | 81 | ||||
Health | 122 | 126 | 229 | 244 | ||||
Corporate | (30) | (32) | (59) | (55) | ||||
Total | $ 331 | $ 271 | $ 596 | $ 542 | ||||
Operating income margin: | ||||||||
Defense Solutions | 8.0 % | 6.8 % | 7.5 % | 6.6 % | ||||
Civil | 7.1 % | 4.4 % | 5.8 % | 4.9 % | ||||
Health | 16.3 % | 18.3 % | 15.7 % | 18.2 % | ||||
Total | 8.6 % | 7.5 % | 7.9 % | 7.6 % |
Defense Solutions
Defense Solutions revenues of
Civil
Civil revenues of
Health
Health revenues of
LEIDOS HOLDINGS, INC.
UNAUDITED BACKLOG BY REPORTABLE SEGMENT
(in millions)
Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts. Backlog value is based on management's estimates about volume of services, availability of customer funding and other factors, and excludes contracts that are under protest. Estimated backlog comprises both funded and negotiated unfunded backlog. Backlog estimates are subject to change and may be affected by several factors, including modifications of contracts, non-exercise of options and foreign currency movements.
Funded backlog for contracts with the
Negotiated unfunded backlog represents estimated amounts of revenue to be earned in the future from contracts for which funding has not been appropriated and unexercised priced contract options. Negotiated unfunded backlog does not include unexercised option periods and future potential task orders expected to be awarded under IDIQ, General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded or separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future anticipated task orders.
The estimated value of backlog as of the dates presented was as follows:
June 30, 2023 | July 1, 2022 | |||||||||||
Segment | Funded | Unfunded | Total | Funded | Unfunded | Total | ||||||
Defense Solutions | $ 4,904 | $ 13,500 | $ 18,404 | $ 4,351 | $ 13,668 | $ 18,019 | ||||||
Civil | 2,134 | 7,710 | 9,844 | 2,051 | 8,846 | 10,897 | ||||||
Health | 1,233 | 4,671 | 5,904 | 1,139 | 4,667 | 5,806 | ||||||
Total | $ 8,271 | $ 25,881 | $ 34,152 | $ 7,541 | $ 27,181 | $ 34,722 |
Total backlog as of June 30, 2023, as compared to July 1, 2022, included
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES
Leidos uses and refers to organic revenue, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, non-GAAP free cash flow and non-GAAP free cash flow conversion, which are not measures of financial performance under generally accepted accounting principles in the
Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.
Organic revenues capture the revenue that is inherent in the underlying business excluding the impact of acquisitions and divestitures made within the prior year; it is computed as current revenues excluding revenues from acquisitions within the last 12 months and divestitures within the current and year-ago periods.
Non-GAAP operating income is computed by excluding the following discrete items from operating income:
- Acquisition, integration and restructuring costs – Represents acquisition, integration, lease termination, severance and retention costs related to acquisitions.
- Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets.
- Asset impairment charges – Represents impairments of long-lived intangible assets.
Non-GAAP operating margin is computed by dividing non-GAAP operating income by revenues.
Adjusted EBITDA is computed by excluding the following items from income before income taxes: (i) discrete items as identified above; (ii) interest expense; (iii) interest income; (iv) depreciation expense; and (v) amortization of internally developed intangible assets.
Adjusted EBITDA margin is computed by dividing adjusted EBITDA by revenues.
Non-GAAP net income is computed by excluding the discrete items listed under non-GAAP operating income and their related tax impacts.
Non-GAAP diluted EPS is computed by dividing net income attributable to Leidos common stockholders, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding.
Non-GAAP free cash flow is computed by deducting expenditures for property, equipment and software from net cash provided by operating activities.
Non-GAAP free cash flow conversion is computed by dividing non-GAAP free cash flow by non-GAAP net income attributable to Leidos common stockholders; operating cash flow conversion is computed by dividing net cash provided by operating activities by net income attributable to Leidos shareholders.
LEIDOS HOLDINGS, INC. | ||||||
The following table presents the reconciliation of revenues to organic revenues by reportable segment and total operations: | ||||||
Three Months Ended | ||||||
June 30, | July 1, | Percent | ||||
Defense Solutions | ||||||
Revenues, as reported | $ 2,187 | $ 2,052 | 7 % | |||
Acquisition revenues(1) | 28 | — | ||||
Organic revenues | $ 2,159 | $ 2,052 | 5 % | |||
Civil | ||||||
Revenues, as reported | $ 902 | $ 857 | 5 % | |||
Health | ||||||
Revenues, as reported | $ 749 | $ 688 | 9 % | |||
Total Operations | ||||||
Revenues, as reported | $ 3,838 | $ 3,597 | 7 % | |||
Acquisition revenues(1) | 28 | — | ||||
Organic revenues | $ 3,810 | $ 3,597 | 6 % |
(1) Current period acquisition revenues reflect revenues in the current as reported figures for 12 months from closing of each acquisition. |
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] | ||||||||
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and | ||||||||
Three Months Ended June 30, 2023 | ||||||||
As reported | Acquisition, | Amortization of | Non-GAAP | |||||
Operating income | $ 331 | $ 6 | $ 51 | $ 388 | ||||
Non-operating expense, net | (57) | — | — | (57) | ||||
Income before income taxes | 274 | 6 | 51 | 331 | ||||
Income tax expense(1) | (64) | (2) | (13) | (79) | ||||
Net income | 210 | 4 | 38 | 252 | ||||
Less: net income attributable to non-controlling interest | 3 | — | — | 3 | ||||
Net income attributable to Leidos common stockholders | $ 207 | $ 4 | $ 38 | $ 249 | ||||
Diluted EPS attributable to Leidos common stockholders(2) | $ 1.50 | $ 0.03 | $ 0.28 | $ 1.80 | ||||
Diluted shares | 138 | 138 | 138 | 138 | ||||
Three Months Ended June 30, 2023 | ||||||||
As reported | Acquisition, | Amortization of | Non-GAAP | |||||
Net income | $ 210 | $ 4 | $ 38 | $ 252 | ||||
Income tax expense(1) | 64 | 2 | 13 | 79 | ||||
Income before income taxes | 274 | 6 | 51 | 331 | ||||
Depreciation expense | 33 | — | — | 33 | ||||
Amortization of intangibles | 51 | — | (51) | — | ||||
Interest expense, net | 56 | — | — | 56 | ||||
EBITDA | $ 414 | $ 6 | $ — | $ 420 | ||||
EBITDA margin | 10.8 % | 10.9 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total |
LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin percentages) | ||||||||||
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most | ||||||||||
Three Months Ended July 1, 2022 | ||||||||||
As reported | Acquisition, | Amortization of | Asset | Non-GAAP | ||||||
Operating income | $ 271 | $ 5 | $ 57 | $ 3 | $ 336 | |||||
Non-operating expense, net | (46) | — | — | — | (46) | |||||
Income before income taxes | 225 | 5 | 57 | 3 | 290 | |||||
Income tax expense(1) | (53) | (1) | (15) | (1) | (70) | |||||
Net income | 172 | 4 | 42 | 2 | 220 | |||||
Less: net income attributable to non-controlling interest | 1 | — | — | — | 1 | |||||
Net income attributable to Leidos common stockholders | $ 171 | $ 4 | $ 42 | $ 2 | $ 219 | |||||
Diluted EPS attributable to Leidos common stockholders(2) | $ 1.24 | $ 0.03 | $ 0.31 | $ 0.01 | $ 1.59 | |||||
Diluted shares | 138 | 138 | 138 | 138 | 138 | |||||
Three Months Ended July 1, 2022 | ||||||||||
As reported | Acquisition, | Amortization of | Asset | Non-GAAP | ||||||
Net income | $ 172 | $ 4 | $ 42 | $ 2 | $ 220 | |||||
Income tax expense(1) | 53 | 1 | 15 | 1 | 70 | |||||
Income before income taxes | 225 | 5 | 57 | 3 | 290 | |||||
Depreciation expense | 26 | — | — | — | 26 | |||||
Amortization of intangibles | 57 | — | (57) | — | — | |||||
Interest expense, net | 50 | — | — | — | 50 | |||||
EBITDA | $ 358 | $ 5 | $ — | $ 3 | $ 366 | |||||
EBITDA margin | 10.0 % | 10.2 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per |
LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin percentages) | ||||||||
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most | ||||||||
Six Months Ended June 30, 2023 | ||||||||
As reported | Acquisition, | Amortization of | Non-GAAP | |||||
Operating income | $ 596 | $ 9 | $ 103 | $ 708 | ||||
Non-operating expense, net | (115) | — | — | (115) | ||||
Income before income taxes | 481 | 9 | 103 | 593 | ||||
Income tax expense(1) | (107) | (2) | (27) | (136) | ||||
Net income | 374 | 7 | 76 | 457 | ||||
Less: net income attributable to non-controlling interest | 5 | — | — | 5 | ||||
Net income attributable to Leidos common stockholders | $ 369 | $ 7 | $ 76 | $ 452 | ||||
Diluted EPS attributable to Leidos common stockholders(2) | $ 2.67 | $ 0.05 | $ 0.55 | $ 3.28 | ||||
Diluted shares | 138 | 138 | 138 | 138 | ||||
Six Months Ended June 30, 2023 | ||||||||
As reported | Acquisition, | Amortization of | Non-GAAP | |||||
Net income | $ 374 | $ 7 | $ 76 | $ 457 | ||||
Income tax expense(1) | 107 | 2 | 27 | 136 | ||||
Income before income taxes | 481 | 9 | 103 | 593 | ||||
Depreciation expense | 63 | — | — | 63 | ||||
Amortization of intangibles | 103 | — | (103) | — | ||||
Interest expense, net | 110 | — | — | 110 | ||||
EBITDA | $ 757 | $ 9 | $ — | $ 766 | ||||
EBITDA margin | 10.0 % | 10.2 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per |
LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin percentages) | ||||||||||
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most | ||||||||||
Six Months Ended July 1, 2022 | ||||||||||
As reported | Acquisition, | Amortization of | Asset | Non-GAAP | ||||||
Operating income | $ 542 | $ 8 | $ 115 | $ 3 | $ 668 | |||||
Non-operating expense, net | (95) | — | — | — | (95) | |||||
Income before income taxes | 447 | 8 | 115 | 3 | 573 | |||||
Income tax expense(1) | (98) | (2) | (29) | (1) | (130) | |||||
Net income | 349 | 6 | 86 | 2 | 443 | |||||
Less: net income attributable to non-controlling interest | 3 | — | — | — | 3 | |||||
Net income attributable to Leidos common stockholders | $ 346 | $ 6 | $ 86 | $ 2 | $ 440 | |||||
Diluted EPS attributable to Leidos common stockholders (2) | $ 2.49 | $ 0.04 | $ 0.63 | $ 0.01 | $ 3.17 | |||||
Diluted shares | 139 | 139 | 139 | 139 | 139 | |||||
Six Months Ended July 1, 2022 | ||||||||||
As reported | Acquisition, | Amortization of | Asset | Non-GAAP | ||||||
Net income | $ 349 | $ 6 | $ 86 | $ 2 | $ 443 | |||||
Income tax expense(1) | 98 | 2 | 29 | 1 | 130 | |||||
Income before income taxes | 447 | 8 | 115 | 3 | 573 | |||||
Depreciation expense | 52 | — | — | — | 52 | |||||
Amortization of intangibles | 116 | — | (115) | — | 1 | |||||
Interest expense, net | 98 | — | — | — | 98 | |||||
EBITDA | $ 713 | $ 8 | $ — | $ 3 | $ 724 | |||||
EBITDA margin | 10.1 % | 10.2 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per |
LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except margin percentages) | ||||||||||
The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income: | ||||||||||
Three Months Ended June 30, 2023 | ||||||||||
Operating | Acquisition, | Amortization | Non-GAAP | Non-GAAP | ||||||
Defense Solutions | $ 175 | $ — | $ 29 | $ 204 | 9.3 % | |||||
Civil | 64 | 1 | 17 | 82 | 9.1 % | |||||
Health | 122 | — | 5 | 127 | 17.0 % | |||||
Corporate | (30) | 5 | — | (25) | NM | |||||
Total | $ 331 | $ 6 | $ 51 | $ 388 | 10.1 % |
Three Months Ended July 1, 2022 | ||||||||||||
Operating | Acquisition, | Amortization | Asset | Non-GAAP | Non-GAAP | |||||||
Defense Solutions | $ 139 | $ — | $ 32 | $ — | $ 171 | 8.3 % | ||||||
Civil | 38 | — | 18 | — | 56 | 6.5 % | ||||||
Health | 126 | — | 7 | 3 | 136 | 19.8 % | ||||||
Corporate | (32) | 5 | — | — | (27) | NM | ||||||
Total | $ 271 | $ 5 | $ 57 | $ 3 | $ 336 | 9.3 % |
Six Months Ended June 30, 2023 | ||||||||||
Operating | Acquisition, | Amortization | Non-GAAP | Non-GAAP | ||||||
Defense Solutions | $ 322 | $ — | $ 59 | $ 381 | 8.9 % | |||||
Civil | 104 | 1 | 33 | 138 | 7.8 % | |||||
Health | 229 | — | 11 | 240 | 16.4 % | |||||
Corporate | (59) | 8 | — | (51) | NM | |||||
Total | $ 596 | $ 9 | $ 103 | $ 708 | 9.4 % |
Six Months Ended July 1, 2022 | ||||||||||||
Operating | Acquisition, | Amortization | Asset | Non-GAAP | Non-GAAP | |||||||
Defense Solutions | $ 272 | $ — | $ 65 | $ — | $ 337 | 8.2 % | ||||||
Civil | 81 | — | 36 | — | 117 | 7.1 % | ||||||
Health | 244 | — | 14 | 3 | 261 | 19.5 % | ||||||
Corporate | (55) | 8 | — | — | (47) | NM | ||||||
Total | $ 542 | $ 8 | $ 115 | $ 3 | $ 668 | 9.4 % | ||||||
NM - Not Meaningful |
LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except percentages) | ||||
The following table presents the reconciliation of non-GAAP free cash flow to net cash provided by operating | ||||
Three Months Ended | ||||
June 30, 2023 | July 1, 2022 | |||
Net cash provided by operating activities(1) | $ 164 | $ 45 | ||
Payments for property, equipment and software | (40) | (21) | ||
Non-GAAP free cash flow | $ 124 | $ 24 | ||
Net income attributable to Leidos common stockholders | $ 207 | $ 171 | ||
Acquisition, integration and restructuring costs(2) | 4 | 4 | ||
Amortization of acquired intangibles(2) | 38 | 42 | ||
Asset impairment charges(2) | — | 2 | ||
Non-GAAP net income attributable to Leidos common stockholders | $ 249 | $ 219 | ||
Operating cash flow conversion ratio | 79 % | 26 % | ||
Non-GAAP free cash flow conversion ratio | 50 % | 11 % |
(1) Prior year financial information has been reclassified to reflect the effect of foreign exchange rate changes on |
(2) After-tax expenses excluded from non-GAAP net income. |
View original content:https://www.prnewswire.com/news-releases/leidos-holdings-inc-reports-second-quarter-fiscal-year-2023-results-301889549.html
SOURCE Leidos
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