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Leidos Reports Strong Third Quarter 2024 Results and Raises Full-Year Guidance

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Leidos (LDOS) reported strong Q3 2024 results with revenues of $4.2 billion, up 7% year-over-year. Net income reached $362 million ($2.68 per diluted share), with a record adjusted EBITDA margin of 14.2%. The company achieved substantial net bookings of $8.1 billion with a book-to-bill ratio of 1.9. Based on strong performance, Leidos raised its FY2024 guidance, projecting revenues of $16.35-16.45 billion and non-GAAP diluted EPS of $9.80-$10.00. The company demonstrated robust cash flow generation with $656 million from operations and returned $254 million to shareholders through dividends and share repurchases.

Leidos (LDOS) ha riportato risultati robusti per il terzo trimestre del 2024, con ricavi pari a 4,2 miliardi di dollari, in aumento del 7% rispetto all'anno precedente. L'utile netto ha raggiunto 362 milioni di dollari (2,68 dollari per azione diluita), con un margine EBITDA rettificato record del 14,2%. L'azienda ha ottenuto prenotazioni nette significative di 8,1 miliardi di dollari con un rapporto book-to-bill di 1,9. Sulla base di una forte performance, Leidos ha rivisto al rialzo le previsioni per l'intero anno 2024, progettando ricavi di 16,35-16,45 miliardi di dollari e un utile per azione non-GAAP diluito di 9,80-10,00 dollari. L'azienda ha dimostrato una solida generazione di flusso di cassa, con 656 milioni di dollari dalle operazioni e ha restituito 254 milioni di dollari agli azionisti attraverso dividendi e riacquisti di azioni.

Leidos (LDOS) informó resultados fuertes para el tercer trimestre de 2024, con ingresos de 4.2 mil millones de dólares, un aumento del 7% interanual. El ingreso neto alcanzó 362 millones de dólares (2.68 dólares por acción diluida), con un margen EBITDA ajustado récord del 14.2%. La compañía logró reservas netas sustanciales de 8.1 mil millones de dólares con un ratio book-to-bill de 1.9. Basándose en un desempeño sólido, Leidos elevó su guía para el año fiscal 2024, proyectando ingresos de 16.35-16.45 mil millones de dólares y un EPS diluido no-GAAP de 9.80-10.00 dólares. La empresa demostró una robusta generación de flujo de efectivo con 656 millones de dólares de operaciones y devolvió 254 millones de dólares a los accionistas a través de dividendos y recompra de acciones.

Leidos (LDOS)는 2024년 3분기 강력한 실적을 보고했으며, 매출은 42억 달러로 연간 7% 증가했습니다. 순이익은 3억 6200만 달러 (희석 주당 2.68달러)에 달했으며, 조정 EBITDA 마진이 14.2%로 기록을 세웠습니다. 회사는 81억 달러의 순주문을 달성했으며, 수주 대 매출 비율은 1.9입니다. 강력한 성과를 바탕으로 Leidos는 2024 회계연도 가이던스를 상향 조정하여 163억 5천만 - 164억 5천만 달러의 매출과 비GAAP 희석 EPS 9.80 - 10.00달러를 예상하고 있습니다. 회사는 운영을 통해 6억 5600만 달러의 견조한 현금 흐름을 창출했으며, 주주에게 2억 5400만 달러를 배당금과 자사주 매입을 통해 반환했습니다.

Leidos (LDOS) a rapporté des résultats solides pour le troisième trimestre 2024, avec des revenus de 4,2 milliards de dollars, en hausse de 7 % par rapport à l'année dernière. Le bénéfice net a atteint 362 millions de dollars (2,68 dollars par action diluée), avec une marge EBITDA ajustée record de 14,2 %. L'entreprise a réalisé des commandes nettes substantielles de 8,1 milliards de dollars avec un ratio book-to-bill de 1,9. Sur la base d'une performance solide, Leidos a rehaussé ses prévisions pour l'exercice 2024, projetant des revenus de 16,35 à 16,45 milliards de dollars et un BPA dilué non-GAAP de 9,80 à 10,00 dollars. L'entreprise a démontré une génération de flux de trésorerie robuste avec 656 millions de dollars provenant des opérations et a retourné 254 millions de dollars aux actionnaires par le biais de dividendes et de rachats d'actions.

Leidos (LDOS) hat starke Ergebnisse für das dritte Quartal 2024 gemeldet, mit Einnahmen von 4,2 Milliarden Dollar, was einem Anstieg von 7% im Jahresvergleich entspricht. Der Nettogewinn erreichte 362 Millionen Dollar (2,68 Dollar pro verwässerter Aktie), mit einer rekordhohen bereinigten EBITDA-Marge von 14,2%. Das Unternehmen erzielte netto Bestellungen von 8,1 Milliarden Dollar mit einem Auftrags-zu-Rechnung-Verhältnis von 1,9. Basierend auf der starken Leistung hob Leidos die Prognose für das Geschäftsjahr 2024 an und prognostiziert Einnahmen von 16,35 bis 16,45 Milliarden Dollar und einen nicht-GAAP verwässerten Gewinn pro Aktie von 9,80 bis 10,00 Dollar. Das Unternehmen demonstrierte eine robuste Cashflow-Generierung mit 656 Millionen Dollar aus dem operativen Geschäft und gab 254 Millionen Dollar durch Dividenden und Aktienrückkäufe an die Aktionäre zurück.

Positive
  • Revenue growth of 7% YoY to $4.2 billion
  • Net income margin improved to 8.6% from -10.1% YoY
  • Record adjusted EBITDA margin of 14.2%, up from 11.5%
  • Strong bookings of $8.1 billion (1.9 book-to-bill ratio)
  • Increased FY2024 guidance for revenue and EPS
  • Robust cash flow from operations of $656 million
  • 5.3% increase in quarterly dividend
Negative
  • None.

Insights

The Q3 results showcase exceptional performance with $4.19 billion in revenue, up 7% year-over-year and a substantial improvement in profitability metrics. The standout metrics include a record adjusted EBITDA margin of 14.2% and non-GAAP EPS of $2.93, up 44% YoY.

The robust $8.1 billion in net bookings and 1.9 book-to-bill ratio indicate strong future revenue potential. The total backlog of $40.6 billion provides excellent visibility into future earnings. The company's improved guidance, particularly the non-GAAP EPS range increase to $9.80-$10.00 from $8.60-$9.00, demonstrates management's confidence in sustained growth.

Strong cash flow generation of $656 million and efficient working capital management with a 59-day DSO reflect operational excellence. The 5.3% dividend increase signals financial strength and commitment to shareholder returns.

The significant contract wins, particularly in critical defense and veterans' services, strengthen Leidos' market position. The AGUN and ABMS-DI contracts are strategically important as they align with the military's modernization priorities and the shift toward integrated command and control systems.

The VBA Medical Disability Examinations option year renewal and AIE Next Generation contract demonstrate the company's strong relationship with key government agencies. These long-term contracts provide stable revenue streams and opportunities for margin expansion through operational efficiencies.

The focus on network modernization and cloud-based solutions positions Leidos well in the evolving defense technology landscape, particularly in zero-trust architecture implementation and advanced biometrics, which are becoming increasingly critical in defense infrastructure.

  • Revenues of $4.2 billion, up 7% year-over-year
  • Net income of $362 million or $2.68 per diluted share
  • Adjusted EBITDA (non-GAAP) of $596 million (14.2% margin)
  • Non-GAAP Diluted Earnings per Share of $2.93, up 44% year-over-year
  • Cash Flows from Operations of $656 million; Free Cash Flow (non-GAAP) of $633 million
  • Net Bookings of $8.1 billion (book-to-bill ratio of 1.9 for the quarter and 1.1 for trailing twelve months)

RESTON, Va., Oct. 29, 2024 /PRNewswire/ -- Leidos Holdings, Inc. (NYSE: LDOS) today reported financial results for the third quarter of fiscal year 2024.

"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."

Summary Operating Results



Three Months Ended

(in millions, except margin and per share data)


September 27, 2024


September 29, 2023

Revenues


$                  4,190


$                  3,921

Net income (loss)


$                     362


$                    (396)

Net income (loss) margin


8.6 %


(10.1) %

Diluted earnings per share (EPS)


$                    2.68


$                   (2.91)






Non-GAAP Measures*:





Adjusted EBITDA


$                     596


$                     451

Adjusted EBITDA margin


14.2 %


11.5 %

Non-GAAP diluted EPS


$                    2.93


$                    2.03






* Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Management believes that these non-GAAP measures provide another measure of Leidos' results of operations and financial condition, including its ability to comply with financial covenants. See Non-GAAP Financial Measures at the end of this press release for more information and a reconciliation of our selected reported results to these non-GAAP measures.

Revenues for the quarter were $4.19 billion, up 7% compared to the third quarter of 2023. Revenues grew year-over-year due to increased demand across all customer segments, especially for managed health services.

With a net income margin of 8.6%, net income for the third quarter was $362 million, or $2.68 per diluted share.  Comparisons to the year ago period are not meaningful as the result of the $699 million pre-tax, non-cash impairment and restructuring charge primarily associated with the Security Enterprise Solutions (SES) reporting unit recorded in the third quarter of 2023.

Adjusted EBITDA was $596 million for the third quarter, up 32% year-over-year. Record adjusted EBITDA margin of 14.2% increased from 11.5% in the third quarter of 2023. Non-GAAP net income was $396 million for the third quarter, up 40% year-over-year, and non-GAAP diluted EPS for the quarter was $2.93, up 44% year-over-year. The primary drivers of increased profitability were increased volumes on managed health services programs and improved program execution and cost control across the company.

Cash Flow Summary

In the third quarter, Leidos generated $656 million of net cash provided by operating activities and used $23 million and $257 million in investing and financing activities, respectively. Net cash provided by operating activities was driven by strong EBITDA and collections performance. Days Sales Outstanding (DSO) for the quarter was 59.

Investing activities consisted primarily of $23 million in property, equipment and software payments, which resulted in quarterly free cash flow of $633 million. Leidos returned $254 million to shareholders in the third quarter, including $203 million in share repurchases and $51 million as part of its regular quarterly cash dividend program. As of September 27, 2024, Leidos had $1,185 million in cash and cash equivalents and $4.7 billion of debt.

On October 25, 2024, the Leidos Board of Directors declared a cash dividend of $0.40 per share, which represents an increase of 5.3% over the prior quarter's dividend amount. The dividend will be payable on December 31, 2024, to stockholders of record at the close of business on December 16, 2024.

Business Development

Net bookings totaled $8.1 billion in the quarter, representing a book-to-bill ratio of 1.9. As a result, backlog at the end of the quarter was $40.6 billion, of which $9.1 billion was funded. Included in the quarterly bookings were several notable awards:

  • Veterans Benefits Administration (VBA) Medical Disability Examinations (MDE) Regions 1-4 Option Year. The VBA MDE Office awarded Leidos the next option year on the existing indefinite delivery, indefinite quantity (IDIQ), firm-fixed price contracts that were originally awarded in November 2018. Leidos QTC Health Services will continue to provide MDE to meet Department of Veterans Affairs (VA) and Department of Defense (DOD) requirements for separating and retired service members.
  • Army Global Unified Network (AGUN). The Army Program Executive Office for Command, Control, and Communications-Tactical Global Enterprise Network Modernization (PEO C3T GENM-O) awarded Leidos a five-year, $331 million contract to modernize the U.S Army's network in alignment with the Army's Network Modernization Strategy and Army Unified Network Plan. Leidos will deploy AGUN to individual Army sites to deliver a standardized, orchestrated modern network architecture that supports the transition to a Zero Trust Architecture and aims to make applications, data, and enterprise services are accessible, trusted and interoperable across the globe.
  • Advanced Battle Management System-Digital Infrastructure (ABMS-DI) Network. The Department of the Air Force's (DAF) Program Executive Officer Command, Control, Communications and Battle Management (PEO C3BM) awarded Leidos a five-year, $303 million contract to oversee the planning, analysis, and operations for the DAF ABMS-DI network. This contract extends Leidos' collaborative role with the DAF to design, develop, and deploy modern Combined Joint-All Domain Command and Control (CJADC2) capabilities for the Air Force and Space Force.
  • Automated Installation Entry (AIE) Next Generation Support. The Army Program Executive Office for Intelligence, Electronic Warfare & Sensors (PEO IEW&S) awarded Leidos the AIE Next Generation contract to enhance security at 92 additional Army and select joint-service installation access control points located around the world. Under the six-year, $249 million contract, Leidos will continue to transform the Army's enterprise physical access control system to a fully extensible, cloud-based solution with advanced biometrics modalities.

Forward Guidance

Leidos is updating its fiscal year 2024 guidance as follows:


FY24 Guidance

Measure

Current

Prior

Revenues (billions)

$16.35 - $16.45

$16.10 - $16.40

Adjusted EBITDA Margin

High-12%

Approximately 12%

Non-GAAP Diluted EPS

$9.80 - $10.00

$8.60 - $9.00

Cash Flows Provided by Operating Activities (billions)

Approximately $1.35

Approximately $1.30

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 A.M. eastern time on October 29, 2024. 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). An archived version of the webcast will be available on the Leidos Investor Relations website until October 29, 2025.

About Leidos

Leidos is a Fortune 500® innovation company rapidly addressing the world's most vexing challenges in national security and health. The company's global workforce of 48,000 collaborates to create smarter technology solutions for customers in heavily regulated industries. Headquartered in Reston, Virginia, Leidos reported annual revenues of approximately $15.4 billion for the fiscal year ended December 29, 2023. 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 U.S. government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, delays in the U.S. government budget process or a government shutdown, or the U.S. government's failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession; uncertainties in tax due to new tax legislation or other regulatory developments; inflationary pressures and fluctuations in interest rates; delays in the U.S. government contract procurement process or the award of contracts and delays or loss of contracts as a result of competitor protests; changes in U.S. government procurement rules, regulations and practices; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of our company; our ability to effectively compete and win contracts with the U.S. government and other customers; our ability to respond rapidly to emerging technology trends, including the use of artificial intelligence; our reliance on information technology spending by hospitals/healthcare organizations; our reliance on infrastructure investments by industrial and natural resources organizations; energy efficiency and alternative energy sourcing investments; investments by U.S. government and commercial organizations in environmental impact and remediation projects; the effects of health epidemics, pandemics and similar outbreaks may have on our business, financial position, results of operations and/or cash flows; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; our ability to accurately estimate costs, including cost increases due to inflation, associated with our firm-fixed-price contracts and other contracts; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; cybersecurity, data security or other security threats, system failures or other disruptions of our business; our compliance with international, federal, state and local laws and regulations regarding privacy, data security, protection, storage, retention, transfer and disposal, technology protection and personal information; the damage and disruption to our business resulting from natural disasters and the effects of climate change; our ability to effectively acquire businesses and make investments; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to manage performance and other risks related to customer contracts; the failure of our inspection or detection systems to detect threats; the adequacy of our insurance programs, customer indemnifications or other liability protections designed to protect us from significant product or other liability claims, including cybersecurity attacks; our ability to manage risks associated with our international business; our ability to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar worldwide anti-corruption and anti-bribery laws and regulations; our ability to protect our intellectual property and other proprietary rights by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to prevail in litigation brought by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to declare or increase future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable law and our agreements; our ability to grow our commercial health and infrastructure businesses, which could be negatively affected by budgetary constraints faced by hospitals and by developers of energy and infrastructure projects; our ability to successfully integrate acquired businesses; and our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face.

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 U.S. Securities and Exchange Commission ("SEC"), including the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the Investor Relations section of our website at www.leidos.com.

All information in this release is as of October 29, 2024. 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


Alyssa Pettus

571.526.6124


571.526.6743

ir@leidos.com


alyssa.t.pettus@leidos.com

 

LEIDOS HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)




Three Months Ended


Nine Months Ended



September 27,
2024


September 29,
2023


September 27,
2024


September 29,
2023

Revenues


$        4,190


$        3,921


$      12,297


$      11,458

Cost of revenues


3,428


3,334


10,192


9,809

Selling, general and administrative expenses


247


239


704


709

Acquisition, integration and restructuring costs


3


5


14


14

Goodwill impairment charges



599



599

Asset impairment charges


6


88


6


88

Equity earnings of non-consolidated subsidiaries


(10)


(8)


(25)


(21)

Operating income (loss)


516


(336)


1,406


260

Non-operating income (expense):









Interest expense, net


(46)


(53)


(146)


(163)

Other income (expense), net



1


4


(4)

Income (loss) before income taxes


470


(388)


1,264


93

Income tax expense


(108)


(8)


(295)


(115)

Net income (loss)


362


(396)


969


(22)

Less: net (loss) income attributable to non-controlling interest


(2)


3


(1)


8

Net income (loss) attributable to Leidos common stockholders


$           364


$         (399)


$           970


$           (30)










Earnings per share:









Basic


$          2.72


$        (2.91)


$          7.19


$        (0.22)

Diluted


2.68


(2.91)


7.13


(0.22)










Weighted average number of common shares outstanding:









Basic


134


137


135


137

Diluted


136


137


136


137










Cash dividends declared per share


$          0.38


$          0.36


$          1.14


$          1.08

 

LEIDOS HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)




September 27,
2024


December 29,
2023

Assets:





Cash and cash equivalents


$        1,185


$           777

Receivables, net


2,706


2,429

Inventory, net


323


310

Other current assets


451


489

Total current assets


4,665


4,005

Property, plant and equipment, net


992


961

Intangible assets, net


558


667

Goodwill


6,123


6,112

Operating lease right-of-use assets, net


459


512

Other long-term assets


541


438

Total assets


$      13,338


$      12,695






Liabilities:





Accounts payable and accrued liabilities


$        2,287


$        2,277

Accrued payroll and employee benefits


903


695

Current portion of long-term debt


592


18

Total current liabilities


3,782


2,990

Long-term debt, net of current portion


4,081


4,664

Operating lease liabilities


467


516

Other long-term liabilities


341


267

Total liabilities


8,671


8,437






Stockholders' equity:





Common stock, $0.0001 par value, 500,000,000 shares authorized, 133,337,275 and

  135,766,419 shares issued and outstanding at September 27, 2024, and

  December 29, 2023, respectively



Additional paid-in capital


1,469


1,885

Retained earnings


3,179


2,364

Accumulated other comprehensive loss


(34)


(48)

Total Leidos stockholders' equity


4,614


4,201

Non-controlling interest


53


57

Total stockholders' equity


4,667


4,258

Total liabilities and stockholders' equity


$      13,338


$      12,695

 

LEIDOS HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)




Three Months Ended


Nine Months Ended



September 27,
2024


September 29,
2023


September 27,
2024


September 29,
2023

Cash flows from operations:









Net income (loss)


$           362


$         (396)


$           969


$           (22)

Adjustments to reconcile net income (loss) to net cash provided by operations:









Depreciation and amortization


71


82


211


248

Stock-based compensation


19


20


59


57

Deferred income taxes


(29)


(104)


(96)


(192)

Goodwill impairment charges



599



599

Asset impairment charges


6


88


6


88

Other


3


19


5


25

Change in assets and liabilities, net of effects of acquisitions:









Receivables


(75)


14


(260)


(109)

Other current assets and other long-term assets


95


92


102


141

Accounts payable and accrued liabilities and other long-term liabilities


25


220


(149)


22

Accrued payroll and employee benefits


198


137


208


105

Income taxes receivable/payable


(19)


24


38


(101)

Net cash provided by operating activities


656


795


1,093


861

Cash flows from investing activities:









Acquisition of a business, net of cash acquired



(2)



(6)

Payments for property, equipment and software


(23)


(50)


(63)


(129)

Net proceeds from sale of assets




2


Other




5


Net cash used in investing activities


(23)


(52)


(56)


(135)

Cash flows from financing activities:









Proceeds from debt issuance





1,743

Net proceeds from commercial paper



(200)



Repayments of borrowings


(5)


(5)


(14)


(2,041)

Payments for debt issuance costs





(7)

Dividend payments


(51)


(50)


(155)


(150)

Repurchases of stock and other


(203)


(1)


(500)


(44)

Proceeds from issuances of stock


2


12


28


37

Net capital distributions to non-controlling interests



(5)


(3)


(8)

Net cash used in financing activities


(257)


(249)


(644)


(470)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash


9


(3)


5


Net increase in cash, cash equivalents and restricted cash


385


491


398


256

Cash, cash equivalents and restricted cash at beginning of period


941


448


928


683

Cash, cash equivalents and restricted cash at end of period


1,326


939


1,326


939

Less: restricted cash at end of period


141


189


141


189

Cash and cash equivalents at end of period


$        1,185


$           750


$        1,185


$           750

 

LEIDOS HOLDINGS, INC.

UNAUDITED SEGMENT OPERATING RESULTS

(in millions)




Three Months Ended


Nine Months Ended



September 27,
2024


September 29,
2023


September 27,
2024


September 29,
2023

Revenues:









National Security & Digital


$     1,865


$     1,852


$       5,471


$       5,400

Health & Civil


1,225


1,055


3,687


3,097

Commercial & International


578


552


1,648


1,588

Defense Systems


522


462


1,491


1,373

Total


$     4,190


$     3,921


$      12,297


$      11,458










Operating income (loss):









National Security & Digital


$        187


$        170


$          545


$          487

Health & Civil


287


165


816


412

Commercial & International


41


(646)


64


(599)

Defense Systems


37


3


92


47

Corporate


(36)


(28)


(111)


(87)

Total


$        516


$      (336)


$       1,406


$          260










Operating income (loss) margin:









National Security & Digital


10.0 %


9.2 %


10.0 %


9.0 %

Health & Civil


23.4 %


15.6 %


22.1 %


13.3 %

Commercial & International


7.1 %


(117.0) %


3.9 %


(37.7) %

Defense Systems


7.1 %


0.6 %


6.2 %


3.4 %

Total


12.3 %


(8.6) %


11.4 %


2.3 %

National Security & Digital

National Security & Digital revenues of $1.87 billion increased by 1% compared to the prior year quarter. Revenue grew across several enterprise Information Technology (IT) programs, which offset reductions on certain Intelligence Community contracts. For the quarter, operating income margin increased to 10.0% from 9.2% in the prior year quarter, and non-GAAP operating income margin increased to 10.5% from 9.8% in the prior year quarter. The increase in segment profitability was primarily attributable to volume and efficiencies on certain fixed price programs.

Health & Civil

Health & Civil revenues of $1.23 billion increased by 16% compared to the prior year quarter. Health & Civil operating income margin for the quarter was 23.4%, compared to 15.6% in the prior year quarter, and non-GAAP operating income margin was 24.2%, compared to 16.5% in the prior year quarter. The increase in revenues and segment profitability was driven by increased volumes and case complexity within the managed health services business as well as net write-ups on certain programs.

Commercial & International

Commercial & International revenues of $578 million increased by 5% compared to the prior year quarter driven by increased deliveries of security products and commercial energy engineering services. Operating income margin for the quarter was 7.1%, compared to (117.0)% in the prior year quarter, which included non-cash impairment and restructuring charges of $679 million related to the SES reporting unit. Non-GAAP operating margin was 8.8%, compared to 9.2% in the prior year quarter.

Defense Systems

Defense Systems revenues of $522 million increased by 13% compared to the prior year quarter. Defense Systems operating income margin for the quarter was 7.1%, compared to 0.6% in the prior year quarter, and non-GAAP operating margin was 10.2%, compared to 7.4% in the prior year quarter. The increase in revenues and segment profitability was primarily driven by increased scope and improved program execution on fixed price development programs.

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 U.S. government represents the value on contracts for which funding is appropriated less revenues previously recognized on these contracts. Funded backlog for contracts with non-U.S. government entities and commercial customers represents the estimated value on contracts, which may cover multiple future years, under which Leidos is obligated to perform, less revenue previously recognized on the contracts.

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:



September 27, 2024


September 29, 2023

Segment


Funded


Unfunded


Total


Funded


Unfunded


Total

National Security & Digital


$        3,323


$      16,532


$      19,855


$        3,146


$      14,802


$      17,948

Health & Civil


1,536


9,835


11,371


2,022


10,141


12,163

Commercial & International


2,631


2,022


4,653


2,586


1,012


3,598

Defense Systems


1,602


3,080


4,682


1,293


3,041


4,334

Total


$        9,092


$      31,469


$      40,561


$        9,047


$      28,996


$      38,043

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 U.S. and, accordingly, these measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in conjunction with Leidos's consolidated financial statements prepared in accordance with GAAP.

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 and asset markdowns related to acquisitions and restructuring activities.
  • Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets.
  • Gain on sale of intangible assets – Represents the gain on sale of intellectual property not used in operations.
  • Asset impairment charges – Represents impairments of long-lived intangible assets, right-of-use assets, and other assets related to our facility rationalization effort.
  • Goodwill impairment charges – Represents impairments of goodwill due to changes in actual performance against performance projected when the goodwill was acquired.

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 (used in) 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 (used in) operating activities by net income attributable to Leidos shareholders.

LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except growth percentages)

The following table presents the reconciliation of revenues to organic revenues by reportable segment and total operations:



Three Months Ended





September 27,
2024


September 29,
2023


Percent
Change

National Security & Digital







Revenues, as reported


$           1,865


$           1,852


1 %








Health & Civil







Revenues, as reported


$           1,225


$           1,055


16 %








Commercial & International







Revenues, as reported


$             578


$             552


5 %








Defense Systems







Revenues, as reported


$             522


$             462


13 %

Acquisition and divestiture revenues(1)



3



Organic revenues


$             522


$             459


14 %








Total Operations 







Revenues, as reported


$           4,190


$           3,921


7 %

Acquisition and divestiture revenues(1)



3



Organic revenues


$           4,190


$           3,918


7 %


(1) Year ago acquisition and divestiture revenues reflect revenues from assets subsequently divested. For the three months ended September 29, 2023, Defense Systems segment acquisition and divestiture revenues include the divestiture of an immaterial asset that was completed on October 20, 2023.

LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data 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 directly comparable GAAP measures for the three months ended September 27, 2024: 



Three Months Ended September 27, 2024



As reported


Acquisition,
integration and
restructuring
costs


Amortization of
acquired
intangibles


Asset
impairment
charges


Non-GAAP
results

Operating income


$           516


$              3


$            37


$              6


$           562

Non-operating expense, net


(46)





(46)

Income before income taxes


470


3


37


6


516

Income tax expense(1)


(108)


(1)


(9)


(2)


(120)

Net income


362


2


28


4


396

Less: net loss attributable to non-controlling interest


(2)





(2)

Net income attributable to Leidos common stockholders


$           364


$              2


$            28


$              4


$           398












Diluted EPS attributable to Leidos common stockholders(2)


$          2.68


$          0.01


$          0.21


$          0.03


$          2.93

Diluted shares


136


136


136


136


136






Three Months Ended September 27, 2024



As reported


Acquisition,
integration and
restructuring
costs


Amortization of
acquired
intangibles


Asset
impairment
charges


Non-GAAP
results

Net income


$          362


$              2


$            28


$              4


$          396

Income tax expense(1)


108


1


9


2


120

Income before income taxes


470


3


37


6


516

Depreciation expense


34





34

Amortization of intangibles


37



(37)



Interest expense, net


46





46

Adjusted EBITDA


$          587


$              3


$             —


$              6


$          596

Adjusted EBITDA margin


14.0 %








14.2 %


(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 share due to rounding.

LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data 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 directly comparable GAAP measures for the three months ended September 29, 2023: 



Three Months Ended September 29, 2023



As reported


Acquisition,
integration and
restructuring
costs(3)


Amortization of
acquired
intangibles


Asset
impairment
charges


Goodwill
impairment
charges


Non-GAAP
results

Operating (loss) income


$         (336)


$            17


$            50


$           88


$          599


$          418

Non-operating expense, net


(52)






(52)

(Loss) income before income taxes


(388)


17


50


88


599


366

Income tax expense(1)(4)


(8)


(4)


(12)


(31)


(28)


(83)

Net (loss) income


(396)


13


38


57


571


283

 Less: net income attributable to non-controlling interest


3






3

Net (loss) income attributable to Leidos common stockholders


$         (399)


$            13


$            38


$           57


$          571


$          280














Diluted EPS attributable to Leidos common stockholders(2)


$        (2.91)


$         0.09


$         0.28


$         0.41


$         4.14


$         2.03

Diluted shares


137


138


138


138


138


138
















Three Months Ended September 29, 2023



As reported


Acquisition,
integration and
restructuring
costs(3)


Amortization of
acquired
intangibles


Asset
impairment
charges


Goodwill
impairment
charges


Non-GAAP
results

Net (loss) income


$       (396)


$            13


$            38


$           57


$         571


$          283

Income tax expense(1)(4)


8


4


12


31


28


83

(Loss) income before income taxes


(388)


17


50


88


599


366

Depreciation expense


32






32

Amortization of intangibles


50



(50)




Interest expense, net


53






53

Adjusted EBITDA


$       (253)


$            17


$             —


$           88


$         599


$          451

Adjusted EBITDA margin


(6.5) %










11.5 %


(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 share due to rounding.

(3) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.

(4) Non-GAAP tax rates were revised from using a blended rate to an individual tax rate for each non-GAAP adjustment, as this approach better reflects the allocation of the tax adjustment.

LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data 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 directly comparable GAAP measures for the nine months ended September 27, 2024:



Nine Months Ended September 27, 2024



As reported


Acquisition,
integration
and
restructuring
costs(3)


Amortization
of acquired
intangibles


Asset
impairment
charges


Gain on sale
of intangible
assets


Non-GAAP
results

Operating income


$      1,406


$           20


$         110


$           6


$           —


$      1,542

Non-operating expense, net


(142)





(2)


(144)

Income before income taxes


1,264


20


110


6


(2)


1,398

Income tax expense(1)


(295)


(4)


(28)


(2)



(329)

Net income


969


16


82


4


(2)


1,069

Less: net loss attributable to non-controlling interest


(1)






(1)

Net income attributable to Leidos common stockholders


$         970


$           16


$           82


$           4


$           (2)


$      1,070














Diluted EPS attributable to Leidos common stockholders(2)


$        7.13


$        0.12


$        0.60


$       0.03


$      (0.01)


$        7.87

Diluted shares


136


136


136


136


136


136
















Nine Months Ended September 27, 2024



As reported


Acquisition,
integration
and
restructuring
costs(3)


Amortization
of acquired
intangibles


Asset
impairment
charges


Gain on sale
of intangible
assets


Non-GAAP
results

Net income


$        969


$           16


$           82


$          4


$           (2)


$     1,069

Income tax expense(1)


295


4


28


2



329

Income before income taxes


1,264


20


110


6


(2)


1,398

Depreciation expense


101






101

Amortization of intangibles


110



(110)




Interest expense, net


146






146

Adjusted EBITDA


$     1,621


$           20


$           —


$          6


$           (2)


$     1,645

Adjusted EBITDA margin


13.2 %










13.4 %


(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 share due to rounding.

(3) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.

LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data 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 directly comparable GAAP measures for the nine months ended September 29, 2023:



Nine Months Ended September 29, 2023



As reported


Acquisition,
integration and
restructuring
costs(3)


Amortization of
acquired
intangibles


Asset
impairment
charges


Goodwill
impairment
charges


Non-GAAP
results

Operating income


$          260


$            26


$           153


$            88


$        599


$        1,126

Non-operating expense, net


(167)






(167)

Income before income taxes


93


26


153


88


599


959

Income tax expense(1)(4)


(115)


(6)


(39)


(31)


(28)


(219)

Net (loss) income


(22)


20


114


57


571


740

 Less: net income attributable to non-controlling interest


8






8

Net (loss) income attributable to Leidos common stockholders


$           (30)


$            20


$           114


$            57


$        571


$           732














Diluted EPS attributable to Leidos common stockholders(2)


$        (0.22)


$          0.14


$          0.83


$          0.41


$       4.14


$          5.30

Diluted shares


137


138


138


138


138


138
















Nine Months Ended September 29, 2023



As reported


Acquisition,
integration and
restructuring
costs(3)


Amortization of
acquired
intangibles


Asset
impairment
charges


Goodwill
impairment
charges


Non-GAAP
results

Net (loss) income


$         (22)


$            20


$           114


$            57


$        571


$          740

Income tax expense(1)(4)


115


6


39


31


28


219

Income before income taxes


93


26


153


88


599


959

Depreciation expense


95






95

Amortization of intangibles


153



(153)




Interest expense, net


163






163

Adjusted EBITDA


$         504


$            26


$            —


$            88


$       599


$       1,217

Adjusted EBITDA margin


4.4 %










10.6 %


(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 share due to rounding.

(3) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.

(4) Non-GAAP tax rates were revised from using a blended rate to an individual tax rate for each non-GAAP adjustment, as this approach better reflects the allocation of the tax adjustment.

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 September 27, 2024



Operating
income (loss)


Acquisition,
integration and
restructuring
costs


Amortization of
acquired
intangibles


Asset
impairment
charges


Non-GAAP
operating
income (loss)


Non-GAAP
operating
margin

National Security & Digital


$           187


$             —


$              6


$             2


$           195


10.5 %

Health & Civil


287



8


2


297


24.2 %

Commercial & International


41


1


7


2


51


8.8 %

Defense Systems


37



16



53


10.2 %

Corporate


(36)


2




(34)


NM

Total


$           516


$              3


$            37


$             6


$           562


13.4 %

 



Three Months Ended September 29, 2023



Operating
income
(loss)


Acquisition,
integration
and
restructuring
costs


Amortization
of acquired
intangibles


Goodwill
impairment
charges


Asset
impairment
charges


Non-GAAP
operating
income
(loss)


Non-GAAP
operating
margin

National Security & Digital


$       170


$          —


$         12


$          —


$          —


$       182


9.8 %

Health & Civil


165



9




174


16.5 %

Commercial & International


(646)


9


9


599


80


51


9.2 %

Defense Systems


3


3


20



8


34


7.4 %

Corporate


(28)


5





(23)


NM

Total


$      (336)


$         17


$         50


$       599


$         88


$       418


10.7 %

 



Nine Months Ended September 27, 2024



Operating
income (loss)


Acquisition,
integration and
restructuring
costs


Amortization of
acquired
intangibles


Asset
impairment
charges


Non-GAAP
operating
income
(loss)


Non-GAAP
operating
margin

National Security & Digital


$           545


$             —


$            17


$              2


$         564


10.3 %

Health & Civil


816



21


2


839


22.8 %

Commercial & International


64


9


22


2


97


5.9 %

Defense Systems


92



50



142


9.5 %

Corporate


(111)


11




(100)


NM

Total


$        1,406


$            20


$           110


$              6


$       1,542


12.5 %

 



Nine Months Ended September 29, 2023



Operating
income
(loss)


Acquisition,
integration
and
restructuring
costs


Amortization
of acquired
intangibles


Goodwill
impairment
charges


Asset
impairment
charges


Non-GAAP
operating
income (loss)


Non-GAAP
operating
margin

National Security & Digital


$       487


$          —


$         35


$          —


$          —


$         522


9.7 %

Health & Civil


412



30




442


14.3 %

Commercial & International


(599)


10


29


599


80


119


7.5 %

Defense Systems


47


3


59



8


117


8.5 %

Corporate


(87)


13





(74)


NM

Total


$       260


$         26


$       153


$       599


$         88


$       1,126


9.8 %


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 activities as well as the calculation of operating cash flow and non-GAAP free cash flow conversion ratios:



Three Months Ended



September 27, 2024


September 29, 2023

Net cash provided by operating activities


$                 656


$                 795

Payments for property, equipment and software


(23)


(50)

Non-GAAP free cash flow


$                 633


$                 745






Net income (loss) attributable to Leidos common stockholders


$                 364


$               (399)

Acquisition, integration and restructuring costs(1)(2)(3)


2


13

Amortization of acquired intangibles(1)(3)


28


38

Goodwill impairment charges(2)(3)



571

Asset impairment charges(2)(3)


4


57

Non-GAAP net income attributable to Leidos common stockholders


$                 398


$                 280






Operating cash flow conversion ratio


180 %


(199) %

Non-GAAP free cash flow conversion ratio


159 %


266 %


(1) After-tax expenses excluded from non-GAAP net income.

(2) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.

(3) Non-GAAP tax rates were revised for the three months ended September 29, 2023, from using a blended rate to an individual tax rate for each non-GAAP adjustment, as this approach better reflects the allocation of the tax adjustment.

 

Cision View original content:https://www.prnewswire.com/news-releases/leidos-reports-strong-third-quarter-2024-results-and-raises-full-year-guidance-302289156.html

SOURCE Leidos

FAQ

What was Leidos (LDOS) revenue in Q3 2024?

Leidos reported revenues of $4.19 billion in Q3 2024, representing a 7% increase compared to Q3 2023.

How much was Leidos (LDOS) net income in Q3 2024?

Leidos achieved a net income of $362 million, or $2.68 per diluted share, with a net income margin of 8.6%.

What is Leidos (LDOS) updated guidance for FY2024?

Leidos raised its FY2024 guidance, projecting revenues of $16.35-16.45 billion and non-GAAP diluted EPS of $9.80-$10.00.

What was Leidos (LDOS) book-to-bill ratio in Q3 2024?

Leidos achieved a book-to-bill ratio of 1.9 for Q3 2024, with net bookings totaling $8.1 billion.

Leidos Holdings, Inc.

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